Put rentals in LLC or get a personal umbrella coverage?

[Stipe Ba]

I have two rentals which were originally home owner occupied homes. They both have mortgages in my name and was considering transferring the title in a LLC for liability purposes . What does everyone recommend ? Should I leave them in personal name and put a umbrella coverage on them ?

My other concern is will this be a issue getting additional properties if mortgages are under my personal name and the properties are in llc ?

Opinions ?

[Jon Reed]

I am a HUGE advocate for having all investment properties under and LLC and not under your personal name for many reasons...

1. Your personal credit score will not be impacted by commercial notes vs a personal mortgage you will have to show proof of rental income and history if you ever wanted to get a personal loan for a car or a personal mortgage to show proof that those personal mortgages are actually investment properties.

2. Liability protection... having them in an LLC just adds one more layer of difficulty if someone tried to sue you.

3. Remaining a bit more anonymous... I don't want people to know how many properties I have. If they are in an LLC then it just adds one more layer to make it more difficult for someone to know how much real estate I own. Think of it if you get in a fender bender and it is your fault... if they get a sketchy lawyer they will look up to see how much assets you have to see how much they come after you for. If they are in an well structured LLC then it will make it more difficult and hopefully make it just a little bit more unappealing for some sketchy lawyer to come after me.

4. No cap on number of size of loan you can get with an LLC vs. personal mortgage

5. It is just a good practice!

Bonus Comment! I also recommend getting an umbrella policy for you personally and also an LLC. If a lawyer is able to pierce your LLC vail then you will have another layer of protection of your personal assets.