When to LLC (Now? Later?)

[Ryan Cruz]

Hi, I'd like to get some feedback regarding at what point I should form an LLC. So currently I own one rental property, and am in contract on another. Both of these properties are out-of-state. I've seen both forum posts and web sites discuss LLCs in the following shapes/forms. Some say to form an LLC for every rental property. Some say otherwise. My previous accountant said that I should avoid forming an LLC until I surpass $1,000,000 in annual gross rental income. He also said that the cost of forming and maintaining an LLC will eat into (and may even eat up) your profits, depending on the numbers. Instead of forming an LLC, he suggested simply to have enough insurance to cover yourself.

I'm going to discuss this with both my new accountant.  However, if there are those here that have strong preferences, I'd love to hear your reasons as to why.

Thanks BP!