Rental Property under LLC?

6 Replies

I am a newbie with Real Estate investing but have always wanted to get into rental properties. Single family to multi-family to commercial. I was wondering if it is wise to keep rental properties under an LLC or just a personal account?

Any other advice on how to get started would be great! I am a contractor so fixing up properties I can do myself and determine those prices quickly and easily. 

I plan to purchase my first one by the end of this year/ beginning of next year. 

there are pro and cons of owning real estate in a LLC or personal name.

Personal Name - Better Rates, less headache for the mortgage, Don't need to go thru that crazy environment phase 1 review, can only deduct interest mortgage and property tax.

LLC - Asset Protection, ALot of things becomes expensable.

I wrote this article a while ago but there's a million comments on it with additional information as well.... about whether or not to do the LLC thing-

https://www.biggerpockets.com/renewsblog/2013/08/1...

I think it ultimately depends on the size of your portfolio and what's in it.

@Ali Boone @John Miller ,

I guess it depends on your location, in NYC the yearly fee for upkeep of a LLC is only 25 dollar, however I do have my accountant do the LLC taxes, which is also expensable.

It really depends on your tax bracket, for me having a LLC is more worthwhile.

Even as a private owner, the same expenses are deductible. As my accountant said, "If the income is taxable, the expense is deductible!" 100% of your rental income is taxable, so 100% of expenses related to your rental property are deductible. This changes somewhat if your property is owner occupied.

Simplify your investing when starting out and keep it under your own name. Insurance is always your first line of defence and protection in either case.

The KISS method is preferred.

Originally posted by @Hui Tin :

there are pro and cons of owning real estate in a LLC or personal name.

Personal Name - Better Rates, less headache for the mortgage, Don't need to go thru that crazy environment phase 1 review, can only deduct interest mortgage and property tax.

LLC - Asset Protection, ALot of things becomes expensable.

I don't fully agree with this. 

  • What expenses can you not deduct under a personal name that you can an LLC?
  • LLCs aren't 100% asset protection all the time. What asset protection do you get with an LLC that isn't covered by an umbrella insurance policy?
  • Personal name isn't just less headache for a mortgage....you can't get a mortgage to an LLC period. It's still personally guaranteed. So, not a lot of help there.

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