setup LLC?

Question

Hi, I was talking to a lawyer about drafting up a lease / rental agreement for me.

He quickly suggested it is a good idea to setup a LLC, he said it is going to be $2500.

He said then the tenant can't find out who I am.   Also, protection from any lawsuit about injury or mold (if it comes to that) won't involve my other properties.   I live in one property and planning to rent out my previous home, the junk mail often have my name on it and I maybe the handyman for minor repairs.

The alternative is a lot of insurance.  For $800 (CA franchise tax) a year I think that can buy maybe a few million coverage umbrella.  (I have a small one right now).

I research about the LLC and some say it's great and some say you don't really need.

Anyway, do you think $2500 is out of line and should I really do LLC?  I was thinking this is someone you can apply with the state on your own too so I am not sure what the cost may include.   That doesn't include drafting the agreement for around $1000 but he said he will discount it.

Thanks

Khang Nguyen · Answer

This is incorrect, at least in Oregon but I would assume other states are similar. The tenant can look up your LLC's name in the state's database and it will list the members of the LLC and the registered agent. So if you're looking to hide who you are from the tenant, I don't think creating an LLC will provide that. Hiring a property manager would be your best bet for anonymity.

Steven Butsch · Answer

Question, I'm using my FHA loan to buy a 4 plex. I'll live in one unit and the other 3 are currently occupied. Is it necessary or even possible to transfer the property to an LLC?

Basit Siddiqi · Answer

The operating agreement is meant for how you and fellow members/partners would deal with issues. Therefore, if you and the fellow members sign it, you can't just randomly change it without amending it and having all the partners/members sign on to the amendment.

Mak K. · Answer

So i have done LLC for some traditional business using a CPA and have done one myself using online websites too. The CPA charged me $750 ish while myself it costed me $350ish. I never understood as the CPA just gave me a binder with blank forms/operating agreements etc.

So when people say, your llc should have this clause and that clause, what are they taking about because the operating agreement is written by the owner and never submitted to the state. So in case of lawsuit, I anyone can change the operating agreement. Is my understanding correct? Or am I thinking it wrong?

Help me to know if you used a CPA for LLC and what did they do besides filing,

Account Closed · Answer

That is way, way, WAY overpriced. You can do it yourself for around $100. Even if you ask a lawyer to help it should not cost anywhere near that much.

Jeremy H. · Answer

I think the mortgage have me hung up here, since I got a very good rate at the low point and I definitely do not have cash to pay it back, and the DTI is high combined it is not easy to get a new loan.

Willie Walden · Answer

I am looking also to start LLC.  Which web site is best to use??

Jem J. · Answer

@Jeremy H.

If you have an existing mortgage, the holding bank may want you to pay off the total balance if you switch to an LLC. If it is free and clear... should be a no hassle deal.

Aaron K. · Answer

WAY too much money to set up an LLC.  As said, you can do it online for a couple hundred bucks maximum.  Or have an attorney do it for under $1000.  Personally I keep each property under it's own LLC.  Yes, it's a pain in the ass but it offers some additional protection.  I also have commercial umbrella insurance over all of the LLC's, as well as a personal umbrella.