Should I create an LLC for managing my properties

3 Replies

I am about to buy two single family houses as rentals on residential 30 yr fixed mortgages so I can’t put them into an LLC. I plan on managing them myself and a friend recommended If I couldn’t own them in an LLC that I should start an LLC to manage them with. What would be the pros and cons of this? Also I am looking forward to using the income from these properties to improve my debt to income so I can borrow more to buy more properties next year or the year after, how might this be affected by starting an LLC to manage my properties?

@Sterling Chapman if you want to move them to an LLC, tell your lender and they should not have a problem with it. You are still personally liable for the debt. Why do you think you need an LLC? There is a commonly believed myth that owning property in an LLC will protect you from lawsuits. This is simply not true. If you are really worried about lawsuits, liability insurance is the first step. After that would be an umbrella policy. The fact is, people only sue you if they think you have money to pay. If you are really rich and want to protect your rentals, put them in a trust and make yourself the trustee. This is a pain but, it actually provides protection.

@Account Closed you are mistaken. Property can be held in a trust. The trust owns the property and is controlled by the trustee. The trustee does not own the property, the trust does. If you are sued, they can attach property that you own, including the LLC that you own. They cannot get the property that is owned by the trust, only the property of the defendant.