Getting closer to buying my first rental property & trying to decide whether to create an LLC. Any advice on Pros/Cons of doing so is much appreciated!

Set up the LLC.

You need to buy your first four units with conventional financing if you want 30 year terms. If so you cannot buy in an LLC. If you place them after the loan it is subject to call due. Although there is no reason a lender will find out it's a risk.

You can buy with LLC with alternate financing but you will be asked to personally guarantee the loan anyway. And will probably get worse terms.

Explore over insurance options to compare strategies

Pros: liability shield if set up correctly
Cons: initial cost, financing

Liability shield is why I suggest when clients ask is to explore insurance options. You can get almost you want from insurance as an LLC.

Thanks. This aligned to what I have found so far in terms of Pros/Cons.

I can see where it would be a very smart move when you get to multiple units - hopefully I'm there in the next 4-5 years but it looked like a lot of steps to achieve insurance on one and like it would complicate initial financing.

I have always struggled with this and even with 7 properties, I sitll have not put them under an LLC

The biggest pro is liability shield but I have always been under the impression that this shield is not difficult to breech so I just set up a similar shield with insurance + Umbrella policy

Also, I hear it is more difficult to buy property under an LLC and there is the increased Tax preparation issues.

Maybe I will look into this again.

I can finance anything in an LLC.

Single member LLCs don't provide the asset protection most think, but it's still worth it.

Reach out if you need assistance with anything.

https://my.community.com/corey

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The biggest pro is liability shield but I have always been under the impression that this shield is not difficult to breech so I just set up a similar shield with insurance + Umbrella policy

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Same. Our CPA said LLC's aren't all they are cracked up to be protection wise, cause additional paperwork, etc. We did what you did: bulked up on insurance.

itsyourboypookie said:

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I can finance anything in an LLC.

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How would you compare your rates to conventional loan rates for rentals?

Rate for non-conventional loans that can vest in a LLC at closing if you want a 30 year fixed are going to be low 5's with excellent credit and 25% down. That is compared to maybe mid 3's for conventional loans with the same situation. As far as pro's and con's, here are our thoughts: https://investmentpropertyloansforllc.com/rental-property-llc-loans/

Thanks!

I have 3 teen drivers. How would an LLC possibly help me? My rental properties are a tiny risk compared to that. I just have an umbrella policy.

Can't add any thing except T&P for teenage drivers. I was up to 8k a year for awhile. Ouchie

Do you ask your CPA for medical advice? I would ask a lawyer for advice on legal protection provided by an LLC. If it's right for you, you can quickly set up a Texas LLC online for $300 at https://direct.sos.state.tx.us.

Not ready to discus this yet but I'll be there eventually - my girls are 5,4, and 2. I'm applying to offshore rigs in 10-12 years for some peace & quiet!