Starting an LLC before first deal vs waiting?

[Joe Vastola]

I have heard/read mixed opinions on getting an LLC before you complete your first deal or waiting until owning numerous doors. From your experience, what would you recommended? I am looking at SFH in the 125-175k range? Additionally, how long does it take to get and how much should I expect to pay? Thanks!

[Megan Hirlehey]

After perusing the forums on here and talking a lawyer-family member of mine (licensed in a state other than the one I’m buying in, so unofficial) I decided to start a LLC right off the bat. It seems there are a lot of issues down the road with transferring properties into LLCs due to “due on sale” financing clauses and transfer taxes (2-4% in PA), in addition to the legal ramifications. I had a lot of people advise me that an LLC “isn’t necessary in the beginning because of low exposure,” but that doesn’t make sense to me because the way I see it, this is quite possibly the riskiest phase of running my business, where I have almost no assets other than personal ones, and if someone wanted to sue me and they win, and the damages weren’t fully covered by insurance and liquidating my one or two “cheap” rentals, well now my personal residence is on the hook and I could literally be put out on the street with nothing. It seems that as your business grows and acquires more assets, you are in a better position to absorb loss and not literally lose the roof over your head. Anyway, only my opinion and that’s how I made my decision.

I’m still working with a lawyer on some other aspects of starting my business and haven’t gotten a final bill yet, but I think he quoted just the LLC price at like $500ish. It took about 3 weeks from first phone call to having the formation papers in hand, but that may vary by state.