LLC for Property Management?

4 Replies

Hi Everyone! 

A couple of quick questions for the group!  

My wife and I will soon own 2 investment properties, in a college town. Both are in our personal names (large umbrella for coverage), and we are intending to self-manage them. What direction should we go for the "property management" part of things? Should we create an LLC for the management?

Are there any advantages to creating an LLC for property management on self-owned rentals?

Thanks,

Daniel

Definitely think a LLC will help with liability and you'll have a different business to deduct expenses from. If you keep your properties in a personal name, at least the PM LLC can give you a "professional" appearance as well.

Is it worth it for only 2 properties? I have 3 and never considered an LLC for management. You can deduct PM expenses whether you have an LLC or not. Curious to hear more input from others.

I had 11 properties and 28 units before I set up my LLC. I have a friend with over 50 units and they are all owned under his personal name.

There's a lot to talk about, but the short version is:

1. Your odds of being sued are small;

2. The odds of losing a lawsuit are even smaller;

3. Even if you do lose, the amount to pay out is typically no more than a few months of rent;

4. Your insurance is more than enough to cover 99.9999% of all lawsuit losses;

Your risk is infinitesimally small. Insurance companies know this and provide you with plenty of coverage because they are in the business of making money, not paying out on claims. the odds of you losing a lawsuit so large that it eats up your insurance and your equity and bleeds into your personal assets is astronomically low and not worth spending brain cells on.