Skip to content
×
Try PRO Free Today!
BiggerPockets Pro offers you a comprehensive suite of tools and resources
Market and Deal Finder Tools
Deal Analysis Calculators
Property Management Software
Exclusive discounts to Home Depot, RentRedi, and more
$0
7 days free
$828/yr or $69/mo when billed monthly.
$390/yr or $32.5/mo when billed annually.
7 days free. Cancel anytime.
Already a Pro Member? Sign in here

Join Over 3 Million Real Estate Investors

Create a free BiggerPockets account to comment, participate, and connect with over 3 million real estate investors.
Use your real name
By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.
The community here is like my own little personal real estate army that I can depend upon to help me through ANY problems I come across.
Goals, Business Plans & Entities
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated almost 3 years ago on . Most recent reply

User Stats

82
Posts
18
Votes
Sam Zawatsky
18
Votes |
82
Posts

Is any LLC really worth it or even necessary?

Sam Zawatsky
Posted

I am currently looking to do my first BRRRR deal, and I noticed that a lot of Hard Money Lenders will only lend to an LLC or other business entity. Upon realizing this, I began researching and have learned that it can be quite costly and add a lot of issues to investing when you are buying with an LLC. Of course, the general consensus is that an LLC will limit your liability in case of being sued, but that is only true if the court doesn't rule that the corporate veil is being pierced, meaning that you executed every aspect of your business properly. This adds a lot of headache to investing, meaning you will need many different bank accounts, pay fees for each LLC yearly, pay additional self employment tax on the rent you collect through an LLC owned property, potentially have trouble selling/ refinancing the property. While a series LLC does seem to help simplify things in some regards, it is also newer and is not recognized by some judges who may be stuck with your case if you happen to be sued. In addition, there are issues associated with selling/ titling of properties that are in an individual series of the main parent LLC that you branch off of. After all these drawbacks, costs and headaches, why not just get an umbrella insurance policy and buy and hold in your own name? Is there something I am missing, or an ideal way of forming an LLC to mitigate all of the issues? Also, how often is it that a tenant really has a viable claim against you that will win in court? I am newer to the game, having only one rental property currently.

Most Popular Reply

User Stats

433
Posts
283
Votes
Matt Ziegler
  • Rental Property Investor
  • Colorado Springs, CO
283
Votes |
433
Posts
Matt Ziegler
  • Rental Property Investor
  • Colorado Springs, CO
Replied

Hit post too early! To continue, if this is s business, treat it as such.

Not only the right business entity, but good insurance as well. Set up your LLC, get a good business/ commercial insurance policy, and sleep better at night!

Best of luck!

Loading replies...