Protecting your rentals

[Michael Marcotte]

I know a lot of people use LLCs to protect their rentals. I was wondering if people create a LLC for each individual rental property to maximize protection or do they put all of the properties under one LLC?

[Marcus Auerbach]

But why? An LLC does nothing to protect your rental, all it does is contain the damage to inside the LLC and only if you do everything correctly, for example you can demonstrate that it is in fact it's own business with it's own bank account etc..

Asset protection becomes an issue when your net worth is so high that you become a target. You can debate how high that is, but it's more than a few rentals. If you buy a 150 unit apartment complex, it will be in it's own LLC. A duplex is a different story.

In my 15 years of being a very active investor I have not seen anyone being in a situation where they benefited from an LLC structure on a residential rental. I do have LLCs, because my lenders make me have them for commercial loans. Make sure you have a good lease, don't give anyone a reason to sue you AND win, carry an umbrella insurance on top of your regular insurance. That's a lot more important than an LLC.

Just my personal opinion, not legal advice.