To LLC or not to LLC...

[Nick Dillaha]

Hey guys, at what stage in the game is it necessary/responsible to put your properties in an LLC?

[James Bowie]

Hi Nick! 

You will find different answers from different people, but the bottom line is that if you can afford it, set the LLC up as early as possible. You never know when you will get your first property and it might even catch you by surprise - it sure caught me by surprise and I ended up taking title personally.

The cheaper way to set it up is to use online services such as legal zoom, they do make it pretty easy, but it is still possible to make mistakes with an online service. If you can afford to have an attorney set it up for you and make sure that you are compliant for all of the necessary regulations in your state, that would be even better (in California it costs me around $1,000 for an attorney to set one up). 

Just an aside - keep in mind that Fannie/Freddie will not loan to entities, so if you are buying rentals where you intend to get permanent Fannie/Freddie type financing, you will need to own those either in your own name or in a trust. 

Hope that helps! 

-James