Naming a LLC before buying properties

[Mike Lee]

A friend of mine and potential business partner is interested in going 50/50 on a first property this summer (likely a SFR that would be a buy and hold/rental). We are both complete newbies to this space, and while I am soaking up all the information I can find (having read and am now trying to apply the information from The Book on Rental Property Investing), my potential partner is more worried about naming a LLC/company.

For those who are further along than us, at what point (if any) did you decide on a name/entity to put your rental properties in? Am I wrong to think we shouldn't be worrying about this so early on? My thought was let's buy a place first then settle on a name before we bring it to market. His thought is buy it in the name of the LLC, as he does not want it to ever be tied to our personal names.

Any advice/suggestions welcome.

[Michael S.]

@Mike Lee  You've received quite a bit of interesting advice in this thread.  Let me try to help clarify a bit, as I am familiar with LLCs.

1. You should absolutely set up an LLC prior to buying your first property with your business partner, and you need to spend the money to have a lawyer set it up (rather than downloading forms off the internet). You need clear articles of incorporation and terms of partnership in case things go sideways in the future.

2. The name of the LLC should be simple and non-offensive. Avoid using your last name(s) in the LLC name.

3. The property should be financed through the LLC. The loan/mortgage/note should be in the name of the LLC, not your personal names. We have financed all our properties through the bank in the name of our LLC without issue.

4. Hire an accountant to help make sure you do everything correct in case the state audits your LLC in the future (most states do random audits).