Like many new investors, I'm in the position where I've purchased a property and need to know whether to put it in an LLC or not. I have a standard insurance policy, but would like more protection should something bad happen. I also want the tax benefits of owning an LLC, but don't want to violate the due on sale clause. I know that this typically does not happen, as it's usually in the bank's best option to have you continue to pay the loan vs. calling it due and risk the borrower defaulting. However, I have also read threads on here where people HAVE had their loans called due...and it certainly doesn't sound pretty!
Any advice would be much appreciated. Thanks!
I was told by a good mentor of mine that before I run I must crawl. My advice would be not to worry about a llc until you have more properties. 3 doors per llc was his recommendation to me.
You should definitely reach out to an attorney about whether or not you should create an LLC.
If you are wealthy or have a lot of equity in your house - it may be advantageous to create an LLC. People who don't go the LLC route is for people to get adequate insurance coverage.
Just to let you know - There are no tax advantages of forming an LLC(unless you select to be taxed as an S-Corp and are looking to limit your self-employment tax exposure).
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