To LLC or to not LLC...?

[Colin Holowach]

Hey BP Community, my 2 brothers and I bought a property. We have LLC and Operating agreement for the business expenses. We also have homeowner and renters insurance. We are the owners, but we go through a Property Management company who are technically the host.

We are trying to work out the Pros and Cons of transferring the property into an LLC for liability toward personal assets. 

LLC - Would you say it's smart to have an extra business insurance policy (like a personal umbrella,) on top of your standard Property Liability Insurance to cover being sued for accidents? On top of this, would you also recommend having a Personal Umbrella policy to cover your personal assets in case someone was able to get past your LLC to your personal assets?

- Re-Fi may be an issue, but Liability weighs heavy

 None-LLC - Would you say transferring a Property to an LLC is worth it? - What would you recommend to protect yourself from Liability like an Umbrella Policy etc.?

- Re-fi freedom is great but liability exposure makes us uneasy. 

Let me know your thoughts, experiences, and recommendations. 

[Sam Gowin]

LLCs are great for branding purposes, organization and offer real protection. As far as liability, an insurance policy is best protection for the house, and then an umbrella for the whole company. 

LLCs can (although rarely) protect you from company liabilities. However, the most likely legal liability comes from car wrecks in our personal capacity. If an LLC is done right, it can protect the property inside from creditors.

The drawbacks of an LLC are the hassle and costs. You have to set up everything in the name of the LLC and not co-mingle funds. You need a professionally drafted operating agreement. Then you have to keep it that way over the life of the company.