LLC Structure for real estate investing

[Manish Shah]

Hi,

I have two properties that I own on my name. Based on some advice, I think it will be better for me to move these properties into their own LLC (reasons - liability protection, separating business from my personal stuff on tax return, keeping all business flow into master/ parent LLC and I get only one parent LLC on my personal tax return. This will also keep expense management clean).

Questions are:

1. Is this structure advisable? Is it overkill?

2. How much does it cost to form LLC typically? I know this all depends upon state but I am interested from attorney's cost perspective.

[Alan Rohrer]

Hey Manish-

1) It isn't overkill to have your rental properties in an LLC. However, it may be overkill to have a separate LLC for each. Talk with an attorney to be sure as you may have a special situation that I don't know about.

There isn't really a tax benefit to having the properties in an LLC, but as you stated- there is definitely an asset-protection benefit.

Be careful about transferring the titles into the LLC's name. Some mortgages have language that does not allow this (they allow it... but they instantly require the entire mortgage to be paid, which I'm sure you would want to avoid!).

2) I've seen attorneys charge anywhere between $500-$1,000 plus the state fee. I would recommend going with an attorney over something online like LegalZoom, as I've seen some issues pop up with that.

Hope this helps!