Rental Property Investor · Huntington, WV · Member since 2019 · 8 posts · 4 votes
We are closing on our first rental property tomorrow!!
As we acquire more rental properties and our business grows, should we put the properties under an LLC? If so, should we wait until we get multiple properties or should we do it right away after acquiring our first property?
This is a hot topic that is asked all the time. You are going to get a 50/50 split between people who say you don't need an LLC until XX amount of properties... then others who say you need one before you buy your first property.
I am in the camp of having all your properties in an LLC even if you just have one. An LLC is super cheap to create and it offers HUGE protections from liabilities. I am also a huge fan of getting an umbrella insurance policy even if just have one property.
Both a LLC and an umbrella policy are super cheap and they help me sleep at night.
Agree that this subject comes up about twice a month. See last discussion from 11 days ago: LLC vs proprietor
I'm with the other 50%. The last I checked with my insurance broker, when I had $3 million coverage for several rentals, I could buy a few million more, like $5 to $6 million rather than dumping the money on an LLC. Usually, litigants sue you personally anyway and the LLC.
So if something happens, I could've have $6 million coverage for myself, whereas the other way, I only got $3 million as the LLC and me together is only covered for $3 million.