Should I create an LLC before or after ?

[Jonathan Valle]

As a real estate investor who is just starting is it wise to creating an LLC before or after your first property buy? what are the pros and cons? Thanks !

[James Masotti]

@Jonathan Valle You can search the forums for probably 17 years and read endlessly on this topic and realize that everyone is going to have a different answer.

Things that people seem to mostly agree on. 

1) If you invest in your own name you can get better mortgage products. Up to 10 properties with a 30 year fixed rate term. This will be much better than the commercial rates and terms you'll get with an LLC.

2) If you invest in your own name get an umbrella liability policy to cover you in addition to your regular insurance.

3) If you buy in your personal name, don't bother transferring to an LLC later. You basically lose the protection the courts would offer because they will see right through the transaction.

4) Depending on exactly how you structure things will depend on if you need to file a separate tax filing for the LLC, or if it can be a disregarded entity and claimed on your personal tax filing.

Personally I have both. Primary residences which I've converted to rental properties stay in my personal name. Properties acquired with the express purpose of being investment properties are in an LLC. This makes sense to me for all the reasons stated above.