Should You Form a LLC for Each Individual Rental Property?

[Chase Cline]

My wife and I just bought our second property and were considering forming an LLC for them. I just read something that said some investors opt to form an LLC for each individual property as a shield so that any lawsuit could only be filed against THAT particular property and not risk having all other owned properties included in the suit. Seems a little overkill to me, but it does make sense.

Thoughts on this?

We've owned our first rental for almost 4 years now so it's definitely time to form something!

[Derek Janssen]

I have an LLC for each of my properties. I agree with @Lance Lvovsky and @George Pauley. Risk vs. Reward.

It's an insurance policy.  

I walked into my lawyer's office expecting to get 1-2 LLCs.

He did a search on my name and within 30 seconds knew about all the properties I owned in that area.  He said, if someone were to get injured on one of my properties (hypothetically) and walked into his office wanting to sue me, he would most likely take that case based on the amount of houses I had and the assets to go after.  It convinced me that I wanted to do what I could to mitigate that risk.

To each their own - there's no right answer.  I'm just sharing my story with you.