Thoughts on effectiveness of LLC's for buy-and-hold investing

[James Shen]

Hi BP Community - 

What are you opinions of using LLCs for real estate investing, particular buy-and-holds? I know this is a fairly debated / evaluated topic and I'm constantly getting mixed messages from research so was hoping to hear from the community here. For context, my partner and I are currently evaluating if we should start setting up an LLC and finding the appropriate firms to work with one (e.g., LLC lender). We're mostly focused on the financial and legal benefits here, can exclude impacts of ownership % and share transaction (this is stuff we can manage ourselves).

Overall, I understand one of the main reasons for LLCs is for liability protection, however, this can easily go to fault if judges just "pierce the corporate veil" and one can also just opt to get an umbrella insurance anyways to limit liability. Additionally, investing through an LLC is a good amount more expensive, with higher interest rates, insurance premiums, entity fees, filing fees, and more. I've spoken to attorneys and CPAs and they all gear towards operating through an LLC, but I understand there's also slight possibility of conflict of interests here since using an LLC may potentially lead to more work and fees for them.

What are your overall thoughts on using LLCs? Is it worth to go through these additional hoops and take the hit on the economics? Perhaps I'm missing certain aspects that's not providing me the proper bigger picture.

Thanks in advance!
James