LLC question put in old LLC or have to make a new one?

Question

I have a LLC but it's for fabrication bussiness.... if I buy a rental property can I put the home into this LLC or do I need to make another LLC for house rentals? I'm ramping down on that bussiness and ramping up my rentals. I was thinking just using this LLC to put all the new rentals in. Yes or no?

Nathan Gesner · Answer

Generic LLC advise to follow. Bottom line is that you don't need an LLC to get started. Focus on learning the law and how to manage a property well. That will offer more protection than an LLC.An LLC is useful for two things: anonymity and legal protection. In most cases, neither is warranted. Warning: I am not an attorney and this can be a complicated topic. Please note the information provided below is a layman's definition designed to provide a basic understanding for the general audience. You should consult an attorney or CPA for your specific situation. ANONYMITY: When you create the LLC, your name is recorded on the documents and published on the Secretary of State website for all to see. So you're not completely anonymous. If you want to be completely anonymous, you can use a Registered Agent. The Registered Agent will record the documents on your behalf so only their name and information appears on the documents. I've done this with my properties because I'm well known in my small town and don't want people to know what I own. LEGAL PROTECTION: By placing your assets in an LLC, you are legally separating them from your personal assets. If someone injures themselves and sues, they will be suing the LLC and not you personally. If your insurance coverage isn't enough, they could seize the LLC assets, but not your personal assets. Additional thoughts: 1. An LLC is not free. You can spend as little as $100 to form an LLC, or you could use an attorney and spend $1,000 or more. There are also additional costs of operating and maintaining an LLC, like separate bank accounts, annual report filings, tax filings, etc. 2. There are rules to follow! If you fail to follow the rules, you may open your personal assets to a lawsuit. An example of this would be mixing your personal money and LLC money in the same bank account. 3. You do not need a separate LLC for each property or a series LLC! Don't make your life more complicated than it has to be. Most professionals will recommend a separate LLC for every $1 million in assets but I don't think that's necessary. In my case, I have residential rentals in one LLC, commercial properties in another, self storage in a third, and my real estate company operates in a fourth. Some have more than $1 million in equity while others have less. 4. The need for an LLC is grossly exaggerated on BiggerPockets and other websites. Have you ever heard of a Landlord being sued by a Tenant and losing property? I've been on this board since 2010 and haven't found an example yet. You've probably heard of big Landlords losing property, but only because they were flagrantly violating Fair Housing, running a slum, or otherwise violating the law in an egregious manner. You are more likely to be struck by lightning twice. The vast majority of lawsuits against Landlords are for wrongful eviction, security deposit disputes, and Fair Housing Violations. Your basic insurance policy with $300,000 in liability coverage should be sufficient in 99.999% of all lawsuits. 5. The best protection for you and your investments? Know and obey the law. I manage around 400 rentals with 12 years experience and have never been sued once. Even if I were sued, I document everything and obey the law, so I won't be found guilty. Even if I were found guilty, the cost would be in the thousands, not in the millions. Insurance would cover it, I would pay the deductible, and no assets would be lost.If you are in an area like San Diego where people are more likely to sue, a judge is more likely to find you guilty, and the payout is likely to be higher, then you may consider an umbrella insurance policy. This policy will provide additional coverage above what your existing policy covers. It's easy to obtain, costs very little, and doesn't require additional, on-going effort to maintain.

Account Closed · Answer

Before you do any of that, take a look at what the CPA/Attorney thinksWhat to Know About LLCs with Mark J Kohler CPA, Attorneyhttps:// www.youtube.com/watch?v=IPsgpn... And you should watch this as well9 Mistakes to Avoid With an LLChttps:// www.youtube.com/watch?v=UYkUOq...

Kirsten M. · Answer

Hey Jim! I'd recommend 2 different LLCs. If your fabrication business gets sued and your rental property is held by the same LLC, then both the business assets and the property can potentially be taken. Any asset in the LLC is "up for grabs". I hope that helps.

Fulton Abraham Sanchez · Answer

@Jim Kelly, hi. There are a few CPA professionals/firms that will be able to help you with your RE business structure. Reach out to one here in Biggerpockets whom you feel is a better fit. Most of us work with clients remotely.

Nate Sanow · Answer

As easy as an llc is to get i would at least get two in this case.