LLC vs. Personal Name for First Rental – What’s Worked for You?

Question

Hey BP community,

I’m in the process of buying my first rental property, and I’ve been getting mixed advice about whether to hold it in my personal name or set up an LLC right away.

Here’s what I’ve been told so far:

• My broker (who’s also a property manager) and a few investors said: “Buy your first rental in your personal name, get solid insurance, and once you start scaling to your 2nd or 3rd property, then look at setting up an LLC.”
• Another investor told me: “If you already have the money for an LLC, set it up first and buy your first property through the LLC.”

I’d love to hear from the community:

• How did you structure ownership for your first rental?
• Did you start with an LLC right away or put it under your name?
• Looking back, would you have done it differently?
• Beyond liability protection, what’s been the biggest benefit or drawback of your approach?

I think this could really help newer investors (like me) who are trying to make the right long-term decision.

Clayton Silva · Answer

It depends. Without knowing your entire financial picture it is impossible to answer. A high quality CPA should be able to give you more advice on that. Also it depends what the LLC is for? Anonymity/privacy, tax purposes, legal protection, etc. Lastly, for most people the LLC is nearly pointless and is an additional cost (as someone who had multiple LLCs and did the whole thing). It generally costs a couple hundred bucks a year to keep it active and provides a lot less legal protection than just a general umbrella policy. I would talk to a CPA and potential a real estate attorney in your area to see if it makes sense for you, but I have seen massive investors do multiple LLCS and massive investors do all personal name.

For your first deal, I would recommend just get a good deal that makes sense, close in your personal name as you can often put it under a trust or LLC later (depending on the lender and loan program used to buy) if you determine that to be the best course of action for you.

Looking back at mine, I would have just done them all in my personal name and saved the money on LLC filings, office address (UPS mailbox) etc.

For your first deal, I would recommend just get a good deal that makes sense, close in your personal name as you can often put it under a trust or LLC later (depending on the lender and loan program used to buy) if you determine that to be the best course of action for you.

Looking back at mine, I would have just done them all in my personal name and saved the money on LLC filings, office address (UPS mailbox) etc.

Julius V. · Answer

Hey @Ezekiel Trevino - In general, holding the property in your personal name is simpler and often gets you better financing terms (lower rates, longer amortization). Many new investors start this way and rely on solid insurance plus umbrella coverage for liability protection until they scale.

An LLC, on the other hand, gives you that extra legal separation, but it comes with trade-offs (e.g., more paperwork and annual filings, possible higher financing costs or stricter loan terms, etc.).

Since this is your very first rental, personal ownership with strong insurance is usually fine to start.

Jared Townsend · Answer

If you're going the umbrella route, make sure you have $300k liability coverage on your landlord policy as most umbrella carriers will require that before offering coverage. It is often not too expensive to add - sometimes as little as $300/year per property.

Matthew Thornton · Answer

I've seen it done both ways. Don't overthink it, get the deal. You can always add it it to your LLC Later.

Stuart Udis · Answer

@Ezekiel Trevino  I do not recommend seeking any further advice from the investor who shared “If you already have the money for an LLC, set it up first and buy your first property through the LLC.” I am not suggesting everyone who owns investment real estate should have an LLC, but everyone who owns investment real estate should be able to afford the costs associated with setting up and maintaining an LLC.  Creating an LLC is going to be highly circumstantial. There's a lot of good advice in these forums related to this subject with varying opinions.  I would start by reviewing thousands of posts and discussions available through the forums.

Benjamin Louie · Answer

@Ezekiel Trevino Hey Ezekiel! For my first rental, I bought it in my own name, simpler financing, lower costs, and solid insurance covered most risk. Once I had multiple properties, I moved them into an LLC for liability protection. Starting personal first is usually the easiest way

Chris Seveney · Answer

I bought my first rental in my personal name because I got a great rate from my credit union. I hired a PM and also umbrella insurance policy

Aaron Zimmerman · Answer

Personal ownership is usually fine. I would be more focused on getting into your first property.

LLCs do come with some documentation requirements such as separate books and records, no commingling of personal vs business funds.

LLC vs. Personal Name for First Rental – What’s Worked for You?

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