Should I create an LLC?

[Stefan Knipp]

Hi Everyone, I just closed on my first SFR and already have it rented out. As I continue to expand with additional purchases in the next year, I am curious about what your opinion is on the formation of an LLC. The biggest pro I see is that it protects my personal assets should I ever be sued by a tenant. What is your feedback on the upside of an LLC? Are there any reasons for. It forming one? I am also curious about how you manage expenses/income for tax purposes. Any good software recommendations? Thanks! Stefan

[Mark S.]

Dave Holland , I tried to contact you (using app on my phone) and it says contact details are hidden. I was hoping you may have some feedback on my question in a different post about whether or not it matters if I pay my attorney fees to set up the LLC out of the business checking of my personal checking. I'm trying to keep everything "separate" and treat it like a business, but with a new business checking account and deposit hold times, it will cause a bit of a delay in paying my attorney. I'm assuming from a tax standpoint it doesn't matter (as it flows through to my 1040), but just wanted to confirm with an expert.

Stefan Knipp , I am in the process of doing some small scale syndication buy-and-hold investing and had an extensive conversation with my attorney. As you might expect them to say, the more layers you can create, the better. In my case, I'll be acting more like a limited partner as far as the investment goes - I'm just writing the check and not taking part in any management. In my case, the LLC may be viewed as "overkill" by some, but I'm okay with the additional cost. In your case, if you'll be actively managing, I would think the LLC would be that much more appealing. Nothing wrong with getting an umbrella policy either, just in case. I would definitely suggest contacting a local attorney and insurance agent to discuss in detail and go over the pros/cons of each. Best of luck.