I'm a newbie from Brooklyn NY and I'm closing in on my first investment buy and hold property (single family) and i wanted to know if its necessary to have an LLC setup before or ok to have it done after?
My experience has been that an LLC is not really needed for rental properties. We have an LLC for our flip houses but that is mainly to help link together our partners to make sure we all have equal equity. The LLC adds a higher level of hassle and depending on the structure of it can cost you extra in taxes. I recommend just getting an umbrella liability policy that covers $1MM or at least all of your assets. It only costs us about $150/year for the umbrella policy while it cost us $1k just to setup an LLC and then we have to pay an accountant every year to prepare the tax statements.
Putting a property into an LLC after you own it personally can be challenging as it is not allowed to simply "sell" it to the company if you are an officer in it. There are ways to do it but you will probably have to get your accountant and maybe a lawyer involved to draft up the paperwork which will cost enough to probably negate any savings.
Again, if liability is your main concern just get an umbrella liability policy.
Putting a property into an LLC after closing will trigger the "Due on Sale" clause which means the bank can require that you pay off the outstanding loan balance or they will repossess the property (similar to "subject-to" deals).
That being said, the likelihood of that happening is slim.
Read this article: http://www.biggerpockets.com/renewsblog/2013/08/17/rental-properties-llc/
Tons of info here, tons in the comments as well...
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