Hi, I’m a newbie to this, and had a question about LLCs. Is it necessary? I plan to buy my first property soon, and talked to an accountant. He says to just put the property under my name for now. But from what I’ve been reading, it seems like registering an LLC is better. Just what to know what everyone here thinks. Thanks. Maddy.
I think it depends on what your goal is and how sure you are that you will reach your goal. If your goal is to operate a substantial rental property business, then I would definitely form the LLC before you buy your first property. Another reason to start with the LLC if you currently have substantial personal assets. If you don’t have substantial asseta and if your goal is to own only a few rentals, then you could hold them in your name and get a balloon insurance policy to protect you.
Good Luck,
Mike
Thanks for the response Mike. My long term goal is to have rentals as my sole source of income(pretty sure that’s everyone’s goal is here). By the way, I purchased your book on Sunday, looking forward to reading it.
How do you get around the eviction only with an attorney with an LLC??
California LLCs cost a lot of money. Also, if any of your business exists in the state of California, you cannot operate that business under the entity of an LLC from a different state unless you pay for an LLC in the state of CA. It's pretty complicated, but the point is, for each LLC that you form, it's probably not worth it if you're just starting out and don't have a high net worth, especially when you can pick up umbrella insurance for less than $200.00 per year.
The laws for LLCs differ from state to state, and it very well may be worthwhile to form one in your home state.
[quote]How do you get around the eviction only with an attorney with an LLC??[/quote
You don’t. The attorney fees cost me $150 per eviction.
Mike