LLC for Rental Properties? Seeking Advice

[Sushil Gupta]

Hi everyone,

I own a few rental properties that are currently under my personal name. I read through BiggerPockets article on LLCs (link) and few other articles, but they do not help enough. Therefore reaching out to community directly 

From the article, I understand that:

• LLCs provide a liability shield if set up and maintained correctly
• There are some financing and due-on-sale clause risks
• One LLC per property = better risk isolation, but more cost/complexity
• Grouping properties under one LLC = simpler and cheaper, but more exposure

I’d love your perspective on a few questions:

1. Does it make practical sense to have LLC?
2. Have you moved properties from personal name to an LLC? If so, how did that process go—especially with your lender?
3. Do you personally structure your portfolio as one LLC per property or combine multiple under one?
4. Any regrets or lessons learned?
5. How much value do you see in this versus just having great insurance + umbrella policy?

Context: These are long-term rentals, not flips. I manage them myself.

Thanks in advance! Appreciate any guidance or experience you can share.

[Isadore Swartz]

Moving to an LLC is a change of ownership. You will incur property tax reassessments. If your loan is not assumable, you will eventually need to get a new loan (they look for tax bill changes and kick in the due on sale clause).

A separate LLC for each property is the safest, as long as you keep proper paperwork. If you don't then an attorney suing you might be able to pierce the corporate shield. Hire an attorney to set these up and maintain them.

Some states, like CAL, have a minimum tax each year (I think it is $800 per LLC). Ask your tax professional about this idea.

Check with your insurance guy to see if a separate policy is required for each LLC if you separate them. Being separate legal entities may dictate it.

Overall it is a good idea if the properties are not highly inflated street value vs. taxed value, AND if they do not have loans on them. AGAIN there is paperwork to keep up. Get a good LLC attorney to keep the LLCs in good standing.

Just my $.02 worth, I am not a attorney or tax professional.

I have not done this, but I wish I had years ago when I bought them.