LLC Headaches

[Kyle Meyers]

The pros and cons of running a real estate business through an LLC and using LLCs to hold properties have been discussed at length on BP. My question is about what LLC users do to avoid some of the headaches of using an LLC. The specific issues I am thinking of are:

1. As I understand it, an LLC must hire an attorney for any legal work and evictions.

2. To keep the LLC protection it must have it's own bank account, if you put each property in it's own LLC, do you need to maintain that many accounts? Do you have another LLC that collects rents and pays for expenses?

3. Getting loans when a property is owned by an LLC seems to be very difficult. Is there any way to get around the issue?

Any other LLC headaches you have come across and solutions would be greatly appreciated. I am trying to expand my rental property business and want to be sure I have the structure set up properly before I get it too big.

I do plan to talk to an attorney about this, but wanted some input from BP first so I know what kinds of things to ask the attorney.

[Vince Greenland]

1. As I understand it, an LLC must hire an attorney for any legal work and evictions......Not in PA. I have several units and find that most attorneys are actually not any more familiar with the process than I am. Also, i have only had one tenant that has showed up at the hearings. bottom line is if they dont pay they are going to lose. So for me why pay for an attorney.

2. To keep the LLC protection it must have it's own bank account, if you put each property in it's own LLC, do you need to maintain that many accounts? Do you have another LLC that collects rents and pays for expenses?..............I have two, one for multi-family's and one for comercial properies. I have heard the arguments about liability, however two tax returns and two bank accounts are enough for me. I have an umbrella insurance policy to cover liability.

3. Getting loans when a property is owned by an LLC seems to be very difficult. Is there any way to get around the issue?..........I have NEVER had a problem getting loans with an LLC. Bottom line is that you have to personally gaurantee the loans anyway, although lately i havent even needed to do that. I guess we have been lucky...actually closing on a loan this week on a small commercial property and will also upgrade my line of credit to $250K, all in the name of the LLC.