Create an LLC for our first house hack?

[Craig Moreau]

Hey BP,

My business partner and I are getting started purchasing our first duplex to live in. We have started other small online businesses as sort of a "side hustle" but never in the real estate space with real assets. As our portfolio grows, we want to make sure were getting the most out of our investment. I've done quite a bit of research and worked with some of my mentors in the real estate space on establishing an LLC for real estate holdings. We want to grow our own portfolio into a business and even further into a property management company (down the road).

Everyone gets into real estate by different means but one of the most popular is house hacking. We plan to purchase our first duplex and house hack until we can double up and buy another one the following year.

When is an appropriate time to establish an LLC for these real estate holdings? We will be generating income from our first property but also living in it, so I'm seeking advice from anyone with experience in creating these entities that may be able to provide some insight. Our plan was to establish it after we purchased our second property since the first one would be solely an income property.

Also, how would having two co-owners impact the taxation (ex. Mortgage interest deductions) if it wasn't a "single-member" LLC? Would this help us or hurt us as we got going trying to build our portfolio?

We want to begin taking advantage of the benefits of creating an LLC along with purchasing our first property, but I don't want to jump the gun if it did not make sense for the first property.

Any insight would be much appreciated!

-Craig