LLCs, Bank Accounts, and Self Management (STR Property)

[Ryan Duffy]

Hi all,

I am closing on my first investment property in the next few weeks (state of AL for reference) and would love a bit of advice regarding the best way to run the STR business. I am purchasing this property with a 20% down second home loan. I know there are varying opinions on this and I've spoken with a real estate CPA. I'm still not clear on what the best course of action is though. Planning on running this "like a business" as best possible. From what I gathered from the CPA and researching here, there are two well-regarded options.

1. File for an LLC (in person for AL, and need to have a PO box and registered agent, EIN comes with LLC). Transfer the property to the LLC. Setup bank accounts and credit cards all under the LLC.

2. Do not file for an LLC, but have an umbrella policy that covers personal assets and more. Still setup separate bank accounts and separate business credit cards.

My questions are:

1. For having a single property, is creating an LLC and maintaining the LLC the best course of action or does it just overcomplicate things? Transferring a title/mortgage to the LLC could be problematic for my lender, correct? Would need to discuss with them before moving?

2. Bank accounts: For business bank accounts and credit cards, an EIN is required. For those that manage their property without an LLC, are you just using your social and non-business accounts and credit cards to manage expenses and revenue? Planning on tracking everything through either QBO or Stessa.

3. Is it possible, or advised to get an EIN without an LLC?

Since we are in underwriting now, it's not possible/advisable to open up additional accounts. As we are looking to get the STR up and running as soon as possible, we are purchasing minor upgrades (furniture/paint), and cost segregation with current personal credit cards and tracking expenses via excel. Is this problematic for any reason? Might just be overcomplicating/overthinking it and just need to get the umbrella policy, setup separate accounts and credit cards (planning on utilizing Carl Avery's method as outlined in her book), start there, and augment in the future if I expand the business.

Thanks in advance for any help provided!