When is the best time to get an LLC?

General Real Estate Investing
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When is the best time to get an LLC?

Cinnamon Russell
Atlanta, GA · Member since 2025 · 23 posts · 6 votes

Hello BP

Rookie here, I currently rented my first property and I wanted to know if it's worth having an LLC on one property or keeping it in your name until you have several units?

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Nadeem Alamgir
Real Estate Agent · Member since 2023 · 831 posts · 577 votes
1y

@Cinnamon Russell

For just one property, most investors keep it in their own name and rely on solid insurance or an umbrella policy for liability protection. Setting up an LLC adds cost, paperwork, and headaches, which usually don't make sense until you've got a few more units. Once you start to scale, that's the time to sit down with a CPA or attorney to figure out the best structure.

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  • William ThompsonBusiness Member
    Accountant · Williamstown, NJ · Member since 2025 · 323 posts · 178 votes
    1y
    Quote from @Cinnamon Russell:

    Hello BP

    Rookie here, I currently rented my first property and I wanted to know if it's worth having an LLC on one property or keeping it in your name until you have several units?


    Great question—I hear this a lot from rookies. With just one property, an LLC can add some liability protection, but it also comes with extra costs and admin. The bigger impact I usually see is on the tax side—sometimes keeping it in your name early on makes sense until you’re scaling, then you restructure. Best move is to weigh the legal protection vs. cost/complexity and think about where you want your portfolio to go.
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    • Cinnamon Russell
      OP
      Atlanta, GA · Member since 2025 · 23 posts · 6 votes
      1y

      @William Thompson thank you! After posting this I literally went searching for more info on this topic and I see that BP Rookie did a show on this topic five months ago! Thank you for your insights Vet. 

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    • William ThompsonBusiness Member
      Accountant · Williamstown, NJ · Member since 2025 · 323 posts · 178 votes
      1y
      Quote from @Cinnamon Russell:

      @William Thompson thank you! After posting this I literally went searching for more info on this topic and I see that BP Rookie did a show on this topic five months ago! Thank you for your insights Vet. 


      Love it! BP Rookie does a great job breaking things down. Glad the timing lined up—you’re asking the right questions early, which puts you ahead of the curve. If you ever want to walk through how this could apply to your own numbers, happy to hop on a quick call and share what I’ve seen work for other investors.
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  • Jeff Roth
    Real Estate Consultant · Ann Arbor, MI · Member since 2022 · 463 posts · 253 votes
    1y

    Hi Cinnamon-

    Great question! 

    You have one rental property and wonder if you should put that in an LLC or wait until you have more properties. You asked when is the best time to do that.

    Opinions vary on this, but; personally, I like putting the property into an LLC at the beginning as it makes you less of a personal legal target if someone did an asset search and if something should happen at the property. The liability is limited to the value in the LLC and insurance on the property.

    To Your Success!

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    • Cinnamon Russell
      OP
      Atlanta, GA · Member since 2025 · 23 posts · 6 votes
      1y

      @Jeff Roth thank you for your insights, I have asked to question to investors outside of BP and I received mixed responses. I currently have landlord insurance  but nothing else outside of that. I see now that I will have to do more research on LLCs to count the cost of its worth it for me as a Rookie with little assets. 

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  • Nadeem Alamgir
    Real Estate Agent · Member since 2023 · 831 posts · 577 votes
    1y

    @Cinnamon Russell

    For just one property, most investors keep it in their own name and rely on solid insurance or an umbrella policy for liability protection. Setting up an LLC adds cost, paperwork, and headaches, which usually don't make sense until you've got a few more units. Once you start to scale, that's the time to sit down with a CPA or attorney to figure out the best structure.

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    • Cinnamon Russell
      OP
      Atlanta, GA · Member since 2025 · 23 posts · 6 votes
      1y

      @Nadeem Alamgir thank you! This is helpful, I discovered umbrella insurance on the Rookie podcast yesterday  and now researching as an option currently I have landlord insurance on the property. As a Rookie I am trying to keep the cost down as much as possible to  pay the mortgage and build reserves. I appricate your insights. 

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  • Julius VincentBusiness Member
    Tax Strategist | CPA, MBA + Wharton FP&A | CFO-Level Planning · Houston, TX · Member since 2025 · 157 posts · 172 votes
    1y

    Hey @Cinnamon Russell - Lenders usually give better rates if the property stays in your name, so a lot of people wait before moving title into an LLC. That said, I recommend setting up an LLC early just to run the business side. It keeps income/expenses separate, builds clean books, and gives you a layer of separation. Pair that with good landlord/umbrella insurance, and you're covered without the higher costs of titling property in an LLC right away.

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    • Cinnamon Russell
      OP
      Atlanta, GA · Member since 2025 · 23 posts · 6 votes
      1y

      Hi @Julius Vincent mmmmhhh this is good and something to think about. My property is out of state and I have a PM, with this one property I am trying to gather as much info as I can about LLC now learning about umbrella insurance to understand if the risk vs benefit is worth the squeeze with little assets. I appreciate your insight, it has definitely helped me narrow down my decision.

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  • Jared Townsend
    Insurance Agent · Orlando, FL · Member since 2015 · 297 posts · 122 votes
    1y

    There is a spectrum of risk associated with real estate investing. Generally speaking, moving towards the 'safe' end of the spectrum adds cost, complexity, and/or hassle. Ultimately it will be your personal comfort with risk vs. return that determines your choices. 

    Less safe ------> more safe

    LLCs: None --> Mutliple homes in one LLC --> Individual LLC per home

    Insurance: Low limit --> high limit --> umbrella coverage

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    • Cinnamon Russell
      OP
      Atlanta, GA · Member since 2025 · 23 posts · 6 votes
      1y

      @Jared Townsend  thank you for the visual explanation! This is great for visual learners like myself and I am sure others will find this helpful!

      1Reply
  • Bob Dole
    Member since 2024 · 68 posts · 25 votes
    1y
    I put each property in their own respective LLCs.  Right now I only have 2, but even with 2 it's a bit of a PIA to keep them separated -- thus I need to double check that I'm paying from the right account, etc.  

    But, in this litigious society, I'd rather pay a little bit more and sleep better at night.  Like insurance, I'd rather be over-insured vs. under-insured.

    I live in CA, so each LLC cost me $800 with this state as well.  A straight money grab.
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    • Cinnamon Russell
      OP
      Atlanta, GA · Member since 2025 · 23 posts · 6 votes
      1y

      @Bob Dole wow this is insightful, with the price of homes these days plus, the cost for operations( mortgage, reserves , insurance, etc, plus placing each home in an LLC. How are people able to cash flow and/or break even. Especially if your not coming to table with a lot of cash? As a rookie I am just trying to figure out the best method without going into "Bad" debt I still have to live.

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    • Bob Dole
      Member since 2024 · 68 posts · 25 votes
      1y
      Quote from @Cinnamon Russell:

      @Bob Dole wow this is insightful, with the price of homes these days plus, the cost for operations( mortgage, reserves , insurance, etc, plus placing each home in an LLC. How are people able to cash flow and/or break even. Especially if your not coming to table with a lot of cash? As a rookie I am just trying to figure out the best method without going into "Bad" debt I still have to live.


       I don't do residential.  It's too much of a PIA to deal with tenants.  I'm in a VHCOL area and the math would not work out unless you put 50%+ down just to flow slightly positive.  Property out of the area would be a PIA to deal with since I'd have to hire a property manager.  

      So for me, I do commercial property. Again, the cap rates are terrible where I'm at. So these are out of the area, but they're NNN so the tenants take care of 99% of the issues.

      The pros of residential, always in demand, appreciation is faster, loans are easier
      The cons of residential, deal with tenants, landlord has no rights (may depend on your area), potential for lots of turnover

      Pros of commercial, longer term leases so hopefully less turnover, if you NNN tenant takes care of 99% of the issues (dependent on how lease is written)
      Cons of commercial, if tenant leaves you may be empty for awhile, getting a loan is a complete PIA and shorter durations too, so will always need to refi

      I will say, if you do a multi-tenant building, I would 1000% put it in an LLC for protection. I would also load up on umbrella insurance for both the property and personal. But I'm probably a tinfoil hat guy as well...

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    • Cinnamon Russell
      OP
      Atlanta, GA · Member since 2025 · 23 posts · 6 votes
      1y

      @Bob Dole thank you for the follow up response, your insights have taught me some new things to take along my journey. 

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  • Aaron ZimmermanBusiness Member
    Accountant · Chicago, IL · Member since 2018 · 2k+ posts · 1k+ votes
    1y

    You will want to run this by your bank to see if you could move your property into an LLC. If you did this without asking, this could trigger the due on sale clause. Better to ask for permission than forgiveness in this case.

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  • Daniel M. Vaughn IV
    Investor · Austin Texas · Member since 2017 · 5 posts · 5 votes
    1y

    You might want to look into a "Series LLC" which includes multiple properties. Flippers use this occasionally. I would form an LLC as soon as possible. Also consider putting your personal home in an LLC for further protection.

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  • Stuart UdisPro Member
    Attorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes
    1y

    Be careful with Series LLC's. They are not recognized in every state. Furthermore, not all lenders are familiar and will lend to them. Important to balance asset protection against ability to practically operate your business.

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  • Ken M.
    Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
    1y
    Quote from @Cinnamon Russell:

    Hello BP

    Rookie here, I currently rented my first property and I wanted to know if it's worth having an LLC on one property or keeping it in your name until you have several units?

    .
    1. If you don't have an Operating Agreement, your LLC offers No Protection in Court
    2. If you don't follow your Operating Agreement, your LLC offers No Protection in Court
    3. Umbrella Insurance, for the most part, offers more protection for people not willing/capable of following the Operating Agreement
    4. If you have an Operating Agreement, and follow the Operating Agreement, you are better off having an Operating Agreement that doesn't allow "charging orders"
    5. One strategy to keep risk at a minimum is to not show assets or equity

    You have to understand what your risks are and what the solutions may be
    https://www.nolo.com/legal-encyclopedia/llc-asset-protection...








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    • Cinnamon Russell
      OP
      Atlanta, GA · Member since 2025 · 23 posts · 6 votes
      1y

      @Ken M. thank you for your insights on this! I will definitely check out the link. 

      1Reply
  • Ashish AcharyaBusiness Member
    CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
    1y

    @Cinnamon Russell Great question — and one that almost every new landlord asks. Here’s how to think about it, both practically and from a tax perspective:

    • Timing: Most investors don't rush into an LLC for their very first rental. The cost (state filing fees, annual franchise taxes, separate accounting) can outweigh the benefits if you only have one property. Many wait until they have 2–3 doors or more before making the switch.
    • Taxes: An LLC doesn't change how your rental income is taxed. Whether the property is in your name or the LLC, the income and depreciation still flow to your personal tax return (Schedule E). You don't get extra tax breaks just by having the LLC.
    • Liability Protection: The main advantage of an LLC is asset protection. If someone sues related to the rental, they sue the LLC instead of you personally. That said, in states like California, LLC protections are sometimes easier to “pierce” if you don’t keep perfect records. A strong landlord insurance policy with umbrella coverage can often provide comparable protection for your first property.
    • Financing: If you already financed the property, the lender likely required you to keep it in your name. Moving it into an LLC later may trigger a "due-on-sale" clause unless handled carefully.

    Bottom line: With just one rental, it's often simpler and cheaper to keep it in your name, get solid insurance, and revisit forming an LLC once you scale. When you do expand, an LLC can make sense for liability protection and partnership structures.

    This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.

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    • Cinnamon Russell
      OP
      Atlanta, GA · Member since 2025 · 23 posts · 6 votes
      1y

      @Ashish Acharya thank you for this information, it is very helpful. I have been doing some research on my own and I am leaning more towards waiting for the LLC.

      0Reply
  • Jason MalabuteBusiness Member
    Accountant · Los Angeles, CA · Member since 2016 · 2k+ posts · 901 votes
    1y
    Quote from @Cinnamon Russell:

    Hello BP

    Rookie here, I currently rented my first property and I wanted to know if it's worth having an LLC on one property or keeping it in your name until you have several units?


    That's really a personal decision, and it depends on your comfort level and long-term plans. An LLC mainly protects your assets—it doesn't give you extra tax benefits.

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