Quitclaim deed - Is it something I should risk?

[Josh Calcanis]

BP,

Just finished up with taxes this year after moving back to Orlando.

One thing my CPA brought up was possibly looking into an LLC strictly for protection of my other assets. Separating properties from my liquid cash, stocks, etc.

After looking around on BP and checking with my lender about a year ago, I decided I didn't want to risk the bank calling the loan due. This year after speaking with the CPA, I checked with my lender and he could not provide in writing that he's giving me the greenlight. He did say that 'they'd' (the bank) would never know. He also reminded me that since it was originally under contract for a personal loan and not business, that passing the entity over to an LLC would not protect me in the case of a default on the loan. He seemed to be giving me (not as attorney) advice and all the information he could. I like to cover my basis and that's why I tried to get something in writing.

From some of the experienced investors on here, what are your thoughts?

Is it worth the risk for my current portfolio, which is 4 units total (2 properties)?

If not, would it be smart to start up an LLC dba an S corp and throw future REI in there?

Should I have a separate LLC for each REI?

I completely understand that the majority of posts on here are not any form of legal advice.

[Lance Lvovsky]

The answer to your first question is it depends. Which is one of the most common answers you will hear. I don't believe there is a one size fits all, and what works for one person, won't necessarily work for you.

With that being said, generally it is best to have rentals in a LLC, but it is not necessary (key difference between what is "best" and what is "necessary"). And if anyone ever tells you that you cannot take business deductions if your rental is not in a LLC, run from them as quickly as you can. The differences really arise when you get into tax planning, as opposed to tax compliance (tax returns). There is more flexibility when it comes to tax/estate planning if you hold rentals in a LLC.

If you have rentals, generally you don't want to put them in a S Corp (or any kind of Corp for that matter).

I am not one to tell clients to hold each rental in a separate LLC. Especially if the value of your rentals is on the lower side. Think of it this way... if your rentals are $50k each, there is no reason of forming a separate LLC for each one.

Of course the above expressed on this public forum is my opinion, and is not to be construed as professional advice.