LLC OR NO LLC?

[Georges A.]

I keep hearing different views and opinions from re investors around me.  Some recommend that I put my properties under LLCs (one for each) and others claim that an umbrella insurance would suffice.

I currently have an umbrella insurance for all my properties and have them all running under a Property management LLC that I own. I believe that the advantages for not having an LLC are:

-  I can represent myself in court if the issue was not important (with LLCs a lawyer must represent me)

- I don't have to deal with the bank calling the loan due on me. I have yet to know one lender willing to change the Mortgagor from Owner to LLC

- I don't have to deal with the tax ramifications as it is around $500 / year for each LLC here in Boston where I live.

I would love to get more feedback on this topic.

Thanks,

[Thomas S.]

A LLC does not prevent any individual from suing directors of the LLC. Regardless of whether you have a LLC or not you still need the insurance to protect you.

To me the disadvantages of a LLC out weigh the advantages but this does not seem to matter as most simply blindly accept that a LLC is necessary. The overwhelming vast majority of investors however will never know because they will never need the protection they believe a LLC provides. It is a case of paying the cost and feeling it is the right thing to do but unless you are a major player it is not warranted.

The test will be when all the BP investors step forward with their personal experiences of how their LLC protected them where insurance would not have. Don't hold your breath waiting to hear their personal examples.