LLCs?

[Chi Cheung]

I'm looking to start buying and holding for rent. I've heard that it's wise to hold houses under LLCs for tax and legal protection. How does it work? Do I need to start an LLC for each house? Where can I find out more information? Thanks!

[Chris Simmons]

After extensive meetings with attorneys, I decided to form an LLC for the property management company only and run the business that way. Because I self manage, my protection is still limited by this. In terms of ownership of the properties....they are still in my name for the world to see and I will start moving them into land trusts por purposes of estate planning only. I have lots of liability insurance on each property in addition to a large umbrella policy through the same company that insures my primary residence and cars. That is WAY cheaper than insurance through a commercial policy that can cover real estate in the name of an llc.

Owning real estate is not near as scary and dangerous as people make it seem. People that have been in it long enough know this. It's the newbies that dream of the millions they will make that fall for the snake oil that gurus sell them about protecting the millions they have not made yet with costly, complicated, ultimately ineffective LLC filings that they can teach you about for $500+.

As you get clusters of properties paid off, or are past the point to which you can leverage conventional loans and can get enough scale to hopefully alleviate the premium increase to insure properties in an LLC vs your name, sure....put them in an LLC...I guess. Will I do that? Ask me after I buy another 30 or so.