Starting out landlord in Pittsburgh, PA

[Peter B.]

Hi all,

I purchased my first property a little over a year ago. I've been living in it, and plan to purchase my next property soon to continue with house hacking. Once I find my next place, I'd like to put my current property up for rent. 

Just some high level questions:

• Should I create some sort of legal structure before I start renting? i.e. LLC, S-corp. Is this something that I should be able to tackle on my own, or do I need to hire a lawyer/CPA to help?
• From the financing side of things... I got a conventional mortgage for my first property. If I should be setting up a legal structure, would I have to transfer that mortgage into the legal entity? 

I'll be looking for a lawyer/CPA to help me out with this, but I wanted to get the high level answers down first.

Thanks!

Pete

[Joe Calloway]

Pete,

Set up an LLC for your next investment and purchase your next deal in the name of that entity (you can do this easily on line but you may want to pay a lawyer (in pittsburgh Max Bier or Phil Scoleri) to do it for you.

On your current property- do not transfer it into the LLC and the mortgage is fine in your name. Unless you are seriously concern about the liability of the property being in your name, which in my opinion is probably not that great of a concern if ...
1) you are properly insured
2) you run a tight ship
3) do you really have that much to take? If "it" does hit the fan then you are better off (see insurance tip below).

It will cost you a lot to transfer the property and then refinance into the entity name . Instead, take that money you would have spent , or actually a small portion of the saved money, and if your worried about liability get another insurance policy to cover the unknown "an umbrella policy" in addition to you property policy.

That way you will have millions of dollars of insurance back up if something would happen which I think is most of the times better than having just the "corporate protection" alone.

In the future do both. LLC + good insurance + being a good(good does not mean be a push over but take care of you property and be responsive to tenants) landlord = limited issues