Boston, MA · Member since 2016 · 60 posts · 15 votes
Hi everyone,
I own a few small multi-family properties (8 units total) and I have heard that it is good to transfer rental properties over to an LLC ownership. I wanted to ask what would be the benefit of doing this? Also, how would I go about creating an LLC/transferring the properties over and how much would it cost?
I'm trying to figure out whether the cost of the LLC is worth doing it now or if I should wait until my portfolio gets bigger. Any help is appreciated! Thanks
From an investors perspective based on growth not taxation or asset protection
If you want the best taxation advise talk to a good accountant or CPA.
Asset protection talk to a good attorney.
Where do put properties in your personal name, LLC or S corp is going to depend on your goals, asset protection, long terms planning.
If you are under 8 properties you can hold them in your personal name and insure them property with a additional umbrella coverage.
If you want to grow quickly then here is a plan we follow: Assuming you intent to scale to 25 properties.
For Rentals.
Each LLC or a Each series in the LLC holds 5-6 properties for asset segregation.
1-5 properties Personal Name - Then transfer to LLC or S Corp (S corp has some other advantage not getting it to that for this discussion)
6-25 Properties Buy directly in LLC (limiting 5 per llc)
Some people in the tread had suggested that 1 property per LLC. I don't think it makes sense because of the costs. I think a few properties per LLC makes more sense and will depends on your goal.
As far as insurance. We have 1 Million per property and Personal Umbrella of 4 time your net worth. So assuming you Total assets owned - Liabilities = 1 Million then we carry a 4 Million personal Umbrealla in addition to the insurance on each property.