Rentals Under LLCs?

[Jay Audi]

Hey everyone, 
I am just starting out in the real estate investment world: I have a primarily residence that I rent out 1 bedroom of and I am looking to purchase a Duplex in soon. 

The deal I am looking at right now is actually two properties in one. As I purchase this second property, should I put that property under and LLC? In your experiences, should each property have their own LLCs, or can just one LLC with all the properties under it suffice? Additionally, what are your thoughts on putting the primary residence under and LLC as well?

Thank you for any additional advice you can give! 

[Lawrence Potts]

Really good question! You’re thinking ahead, that’s always good 👍

I’m not an attorney nor am I pretending I know the legal and financial ramifications of either choices, but my understanding is that:

1. Lending is much stricter and uglier with LLC's. How much asset protection it gives you is situational, if you don't operate your business ethically, it doesn't matter if it's in an LLC or a wet paper bag: you'll get hit hard. So lending will be harder (worse terms) but those can change as you gain experience in the eyes of underwriters and banks/CU's.

2. How many properties you put into each LLC is completely up to you. Sure, you can do one LLC per property, but that's a separate filing per house every year, that can be a HUGE headache in the future as you grow! Each LLC with its own EIN, etc….But, too many houses in one LLC, and that could be risky too. If one property gets hit with a lawsuit, a prosecutor will see how much net worth is in that LLC and try to get what they can (or so I'm told?). One rule that a mentor of mine does is he keeps a value of $1 million per LLC, and keeps about 70-80% leveraged. Run with that if you want, it's his personal preferences so do what makes sense to you.

What would be the purpose of putting your primary under an LLC?