First time forming an LLC

[Gavin Wynn]

I am very new to the industry, to the point that I think I should start an LLC as a holding company. The local title company says I should talk to an attorney first, but I'm wondering if this is necessary. Can I go straight through the secretary of state? Or should I use a service such as Zenbusiness or Tailor Brands? Thanks in advance.

[Evan Polaski]

@Gavin Wynn, why are you wanting to form an LLC?

Asset protection is an obvious reason for many, but if you are sued, in reality, the opposing attorney will do everything to get to you personally, anyways.  i.e. did you sign leases personally?  Do you have an outstanding mortgage in your personal name?  Are you using a personal Zillow account to list your properties for rent, or a personal email/cell phone to take tenant inquiries?  Not to say an attorney will be able to pierce the corporate veil, but they will certainly try, anyways.

I am an Ohio resident, and I did my own and my wife's directly though the secretary of state. I (we) have only been sued once on a property that was in my wife's LLC, and we settled before we found out if they other person was going to be able to pierce the veil of her LLC.

I don't mean to discourage you from forming an LLC, but there are real costs, beyond formation. Lending terms on properties owned in LLC tend to require more equity and higher interest. Some title companies will require an operating agreement, even if sole member, to buy or finance a property. Separate bank account, credit cards, signature blocks for every contract and document you are signing for LLC.

I have an LLC for my rentals, so I am 100% for them, as long as you understand what you are getting into. And in reality, while I have never had to test the strength of my LLC, if you are being sued, any half decent attorney will try to pierce your corporate veil anyways and try to get to you personally anyways. Again, very limited experience with this, but the one time I was sued, the attorney tried to connect social media posts on a personal account to bring personal exposure for a property that was held in an LLC. (We settled anyways because the settlement was cheaper than what my attorney bills would have been to defend against this absurd suit, so I didn't test the true strength of the LLC)