Are there any big advantages to forming an LLC?

[Brent Paul]

I am looking at buying a 4plex in the next few months and have been debating what to do.

I have read that some people form an LLC and some people don't at all.

A friend of mine suggested I need to form one for tax purposes and it takes the liability away from my person assets. Also something about a reduced tax rate. My gut tells me he is wrong, but I am no expert.

What are the advantages of forming them? I don't plan to own 50 properties but maybe 10 or so.  

[Erin A.]

What @Ned Carey said!

And, also:

1. The private lenders I have worked with and spoken to will only lend to LLCs or other entities (with a personal guarantee, of course). 

2. LLCs help you cluster and organize your risk. You may wish to establish various LLCs for different types of property (apartments, offices, etc.), different cities/regions, or to separate different groups of investors. 

3. Not sure what the LLC tax climate is like in MN, but here in CA each LLC must pay a *minimum* annual tax of $800. For example, it doesn't really make sense (in my opinion) to put a small multifamily property cash flowing at $3,000/year into a California LLC.