All Forum Posts by: Dan N.

I looked into this a lot also and my final conclusion..... no LLC for me. But lots of insurance.

I think a lot of people do it solely because subconsciously it makes you feel "legit".... I'm running a business right? So I want to make it feel like a real business.... so I get an LLC.

From all my research I've learned that a LLC by a small time LL can be easily pierced by a half decent lawyer unless that LL is following ALL the protocols to be a "real" LLC...and most people are not. That means separate bank accounts.... all the documents for the property are under the LLC...every bill, every expense comes from the LLC bank account or CC. Every deposit, every transactions.... you have regular LLC meetings, with agenda's, meeting notes etc etc. Without all those being in place, a decent lawyer can prove that you are really acting as a private entity and hiding behind an LLC label. So unless you are really anal about all that stuff, you wont really hold up in court as a true LLC.

My decision...no LLC be heavily insured....

Dan, 

It took me a couple years reading a stack of books and actively investing into real estate to have the EXACT realizations that you have. As Allan has mentioned as well, LLCs protect you.... but don't. The more I network with other successful investors, the more I refrain away from obtaining an LLC for future properties. Take note, that I have numerous properties, of course all without an LLC. There are multiple layers of protection such as home insurance, possibly requiring tenants to have rental insurance, having property managers in the property (they have insurance too), and simply being a good landlord! That sounds so cheesy but imagine a terrible land lord that refuses to replace things, or call a plumber, or doesn't address health concerns such as mold or whatever it be! If those things happen, the likelihood of having a tenant that would want to sue you goes down. Of course, mistakes and accidents happen so you could always be an amazing landlord/property manager that gets sued, but that's why many tap into umbrella policies. Not sure if that's value added, but sure hope it is!

@Dan N.

The LLC is meant as an additional layer of liability protection. The LLC is a business entity that is separate from you as an individual. This will ensure that anyone who attempts to sue; will only have access to the assets of the LLC (in this case, the property in the LLC); as opposed to having access to your personal assets. This is not meant as a substitute to liability coverage; but an additional layer of protection. The properties I currently own, have both liability coverage as well as the liability protections of an LLC associated with them.