To LLC, or not to LLC, that is the question

[DJ Cummins]

Hello Everyone!
So we are trying to start getting our ducks in a row before we start shopping for our first property. I don't want my wife and I to fall in love with a deal and jump on it before we have everything ready. I am going to give a list of the things on our "To Do List." Can you please let me know what I am leaving out? Also, my main question is on an LLC. Is this the best way to go about protecting yourself? My wife and I are actually partnering with her cousin and his wife. The four of us together are going to try and buy at least 1 property per year. Is the llc the best way to go about our protection? How much approximately does that cost to set up?

To-Do List:
1. Talk with our lawyer about the LLC (what else should we cover in this meeting?)
2. Bank-Preapproval (shouldn't be a problem)
3. Speak with our accountant about our upcoming plans.
4. Work with our insurance agent (wife's aunt is an agent)
5. Contact a Realtor (I know a few)

So what else am I missing here? Excited for this new venture and can't wait to get started, but I am already feeling the nerves!

Any and all advice is appreciated!!
DJ Cummins

[Tom Mole]

Hi @DJ Cummins,

It sounds like you have quite a thorough plan. The short answer is, yes, an LLC can help to protect yourself. Is it the best way to do that? I don't know. I depends on what you're hoping to protect against.

You probably want to talk to an asset protection and tax attorney. An LLC can be sued just like any actual person. The attack could come from a tenant, a past owner, a future owner, the government, a fellow partner...almost anywhere. You have to know what you're protecting against. The more you worry, the more complicated it becomes. That translates into time and money, so be reasonable. Remember what Mark Twain said, "You can make a thing foolproof, but you can't make it damned foolproof".

Frankly, based on what you've said, I'd send the wife out shopping right now with one caveat, she should not "fall in love" with anything but you, sir. NEVER fall in love with a deal. That said, get started with your business. You're ducks are better aligned than most of us. If you're serious about wanting to get started, then take a break from preparing.

Where are you looking for your investment property? Particularly, in what state? Each state has its own Department of Corporations with there own costs and rules. You already plan to talk to an attorney, so do that. You'll get everything you can think of and a lot more.

You'll do well to get started while you continue to prepare. You can always put your property into an LLC, corporation, land trust, whatever later. Congratulations on being so organized and well prepared.

All the best.