Should I create an LCC before I invest?

Question

I have decided to begin my journey as a REI and want to buy properties and convert them into rentals. Do you recommend starting as an LLC before getting financing or under my personal account?

Michael Plaks · Answer

@Moses Castillo

for taxes - no. For liability protection - maybe, it's a question for an attorney, and even attorneys do not agree among themselves.

Search this forum for "asset protection", and you will find dozens of discussions

Ryan Ingram · Answer

Hey Moses,

I don't think it matters too much. Some states are easier to start LLCs in than others. So, I am speaking on this from an Ohio perspective, where it takes about $120 and 12 hours from paperwork to grand opening on an LLC.

For what it is worth, I purchased my first property a few months before I started my LLC. Later, I executed a quit claim to get the property into my LLC.

For your first property, the liability exposure won't be too severe if it is in your personal name. You can easily get an insurance policy with $1,000,000/$2,000,000 liability limits.

I hope this is helpful. More than happy to elaborate if necessary.

Weston Couch · Answer

@Moses Castillo Hi Moises, the benefit doesn't come into play until you acquire the properties, but having insurance and an LLC is definitely a good place to start with asset protection once you do. If you're interested in a free one, or knowing more, just connect with me.

James Wise · Answer

No need for an LLC at this stage of the game. You probably won't have the opportunity or need for it for awhile. If you want to buy 1-4 unit properties you'll need to buy them in your personal name to qualify for financing so unless you are doing partnerships or commercial deals put it on the back burner.

Should I create an LCC before I invest?

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