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Rental Properties Spinoff: Should you LLC?
Posted on 3/14/17 at 11:31 am
Posted on 3/14/17 at 11:31 am
Thought a separate thread was better than hijacking the other one, but what does the Money Board think? I have a few different rental properties but they're not LLC's - just all owned personally. I do have a million dollar umbrella on them in case of personal injury however and was waiting until I had about 4 or 5 before I set them all up as an LLC. I recently was speaking with some closing attorneys who suggested putting each one in it's own LLC to protect yourself against any liability but other articles I've read say if someone gets hurt in one of them, the LLC wouldn't really be able to protect you anyway.
I guess I'm just curious if anybody here has multiple investment properties, how you have them set up, and why...
I guess I'm just curious if anybody here has multiple investment properties, how you have them set up, and why...
3
Posted on 3/14/17 at 11:33 am to Giantkiller
I have a different LLC for each property, I'm not trying to have litigation at one affect another if that were the case.
Posted on 3/14/17 at 12:48 pm to dabigfella
In certain states you should look into the Series LLC. TX has it.
Posted on 3/14/17 at 12:52 pm to Giantkiller
quote:
I recently was speaking with some closing attorneys who suggested putting each one in it's own LLC to protect yourself against any liability but other articles I've read say if someone gets hurt in one of them, the LLC wouldn't really be able to protect you anyway.
This is solid advice, and you should follow it. I have a catering business and every trailer is a separate LLC. You do not want something to happen to a scum bag and lose everything you have worked for.
Posted on 3/14/17 at 12:56 pm to CoachChappy
Friend of mine has his rentals held by a holding company in Panama. He really went above and beyond 
Posted on 3/14/17 at 2:51 pm to Giantkiller
quote:
different LLC for each property
This is the way to go
Posted on 3/14/17 at 4:28 pm to Tigerbait337
Thats how I have mine.
Posted on 3/14/17 at 4:29 pm to NOLAGT
What's the price of an LLC in Louisiana?
Posted on 3/14/17 at 4:33 pm to Paul Allen
About $75 and $35 annual fee.
Posted on 3/14/17 at 10:11 pm to ynlvr
How do you put it in the llc? Does the mortgage remain in your name still? Any info or literature on the logistics would be much appreciated.
Posted on 3/14/17 at 10:16 pm to PatrickBeetmen
I just bought my first rental and am in the process of doing this. You create the LLC and just go to a title company and get the title transferred from you to the LLC. mortgage will still be in your name.
If you have a loan on the house as I do you are not technically supposed to do this and if the lender finds out you could possibly be forced to pay the entire loan off. I am also told if the lender does find out they will likely just send you a mean letter and you can hurry back to the title office and transfer back to yourself.
This is what I know about that
If you have a loan on the house as I do you are not technically supposed to do this and if the lender finds out you could possibly be forced to pay the entire loan off. I am also told if the lender does find out they will likely just send you a mean letter and you can hurry back to the title office and transfer back to yourself.
This is what I know about that
Posted on 3/15/17 at 10:28 am to thatguy777
quote:
If you have a loan on the house as I do you are not technically supposed to do this and if the lender finds out you could possibly be forced to pay the entire loan off. I am also told if the lender does find out they will likely just send you a mean letter and you can hurry back to the title office and transfer back to yourself.
Or you just buy it in the name of the LLC in the first place. That way the mortgage and the title are in the LLC.
I would def recommend 1 LLC for your properties. I think having one for each property is overkill personally.
Your commercial lender at your bank should be able to help you easily convert them from your name to your LLC.
Posted on 3/15/17 at 10:58 am to TopWaterTiger
I'm not a lawyer but here's some advice I was told, if you are the person doing the work an llc for a rental property can be pretty worthless. Llc's are there to protect you as the owner from liability that others did, if you are the one liable for the issue paying $100/ year for a llc isn't going to protect you.
So if you fail to repair a roof and something happens, there's very little protection. But if your roofing contractor screwed something up there is protection for you through the llc.
So if you fail to repair a roof and something happens, there's very little protection. But if your roofing contractor screwed something up there is protection for you through the llc.
Posted on 3/15/17 at 11:05 am to baldona
quote:
o if you fail to repair a roof and something happens, there's very little protection. But if your roofing contractor screwed something up there is protection for you through the llc.
yes under your scenario you are still liable, the big difference though it that just the LLC is liable. Your personal savings accts, 401k, personal home, etc are protected. If you own it in your name personally, the all your assets are fair game to anyone who comes after you.
Posted on 3/15/17 at 11:18 am to TopWaterTiger
If you have an umbrella for just that llc that covers your total liability yes, but my understanding is if you don't they can come after you personally still.
Again, my understanding is that $100 piece of paper still doesn't CYA for everything and anything you do negligently personally. It is mostly for issues outside of your immediate control. So if you have a maintenance man screw something up you can be covered, but if you screw up maintenance that causes a liability you may still be held personally responsible.
I'm not a lawyer, all I'm saying is slapping an llc on everything doesn't automatically CYA. It's not that simple.
I personally prefer multiple properties in an llc with a larger portion of money spent on umbrella insurance.
Again, my understanding is that $100 piece of paper still doesn't CYA for everything and anything you do negligently personally. It is mostly for issues outside of your immediate control. So if you have a maintenance man screw something up you can be covered, but if you screw up maintenance that causes a liability you may still be held personally responsible.
I'm not a lawyer, all I'm saying is slapping an llc on everything doesn't automatically CYA. It's not that simple.
I personally prefer multiple properties in an llc with a larger portion of money spent on umbrella insurance.
This post was edited on 3/15/17 at 11:22 am
Posted on 3/15/17 at 12:35 pm to baldona
Everyone is responsible for their own negligence. An LLC isn't a get out of jail free card.
For example, an LLC with 3 members. If Member A does something grossly negligent, the LLC and Member A can be sued for that negligence. Members B and C cannot be personally sued, but of course, their interest in the LLC can be affected.
For example, an LLC with 3 members. If Member A does something grossly negligent, the LLC and Member A can be sued for that negligence. Members B and C cannot be personally sued, but of course, their interest in the LLC can be affected.
Posted on 3/15/17 at 12:50 pm to Teddy Ruxpin
Yes, said much better than I. You can't buy a $50,000 rental property for $10,000 and put it into an llc of its own, then have someone sue you for $1 mil and not expect them to come after you for more than what the property is worth.
LLCs for rental properties are very good, I just don't want anyone thinking they are are a steel curtain from all personal liability.
LLCs for rental properties are very good, I just don't want anyone thinking they are are a steel curtain from all personal liability.
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