New: do we need LLC with inside/outside protection?

Question

New to this site: when holding a rental is it better /wise, etc. to create entities with Inside & outside protection to hold all future BRRRR properties?

_ Also how to add an existing multi-family rental property to this this type of entity?.

_ For BRRRR properties what the best type lender to get a Refi, like big banks or community banks, etc

Thanks, Ralph

Jon Reed · Answer

Always buy all RE through your LLC. Have business bank accounts created in your LLC's name. Get commercial loans in your LLCs name and be the guarantor of the note.

If everything is in your LLC name then you are protected from tenant lawsuits... unless you show gross negligence then they can still sue you personally.

The LLC will not give you any protection from defaulting on loans, avoiding taxes, and other government agencies. You protect yourself from that by doing business in a legal and ethical way.

OHh bonus tip! Get an umbrella insurance policy, just in case.

Ralph Palma · Answer

Thanks Jon for your replay: Actually I'm asking many question in one. let me rephrase.

1_ How do you protect your property from any lawsuit a) by tenant, etc "inside". b) lets say a car accident "outside".

2_If you buy a property (cash), you can buy it thru your LLC and depending in which state is the property it will have inside or insisde & outside protection.

3_ if you buy a property (w/ mortgage) you can still move it to your LLC (correct?)

So I guess the main question is how do you guys buy your properties (BRRRR) thru your own name , or you use an entity (LLC) to hold one or a set of properties?

In the very distant past when I did this (flip's) I use my name and no entity. Now to use the BRRRR process it is better to use an entity?

I hope it make more sense now (let me know)

Thanks, Ralph

Jon Reed · Answer

So... when you are saying 'inside protection' are you referring to an LLC protecting your personal assets from investment debt? If so then you are probably going to be out of luck. When you are first starting out you will find it almost impossible to get a loan where they will only hold your newly formed LLC liable for the debt. They will want you to personally sign for the debt as well.

An LLC is really only good for protecting your personal assets from a liability lawsuit.