Benefits of an LLC when starting out

[Jacob Munson]

Hi! I plan on moving to Denver in the coming years and plan on turning my current residence (2B1B condo in San Diego) into a rental property. I have someone local to help me manage the property but I was curious about the pros/cons of starting an LLC and putting the condo into it. I plan on acquiring additional rental properties as well that I would keep under the LLC if I chose to go that route.

Is it difficult to move a property into an LLC after the fact? Any pitfalls that I should be aware of or things to watch out for?

Thanks in advance!

[Jeff White]

@Jacob Munson An early welcome to Denver!  

Regarding the LLC, check out the Due on Sale Clause in your loan documents for your condo.

Technically, the lender could potentially call the loan due if you transfer title from your personal name to an LLC.

Most likely, you have nothing to worry about, but it is a possibility.

Also, an LLC doesn't provide any additional protection with liability since it is a single member LLC.

LLC don't provide asset protection, tax benefits, or really any benefit that would make it worthwhile to get an LLC.

I like the above poster's suggestion with increasing your liability insurance for your rental before moving to Colorado, and then getting an Umbrella Insurance Policy.