LLC or sole prop

[Mark Forest]

Yes I know this topic has been discussed many times. However I am accumulating more properties and I need to make a commitment to either forming an LLC or just staying a sole proprietor. I have heard and read that lawyers like the LLC because it generates easy cash for them to set it up, but any of their brother lawyers can easily "pierce" the LLC because the reality is that the LLC IS the landlord since we manage it.

The official line is also that LLC owners cannot represent their LLC properties in court for evictions yet I hear that many landlords with LLCs and even S-corps routinely do their own evictions with no problems from the judge.

So what has been all of your experiences? Have any of you been sued, but protected by an LLC? Have any of you had your LLC "pierced"? Have any of you with LLCs represented yourselves in court with evictions? Thank you in advance for informed opinions and experiences.

[Mitch Kronowit]

Originally posted by Steve Might:

I have heard that there should be about five properties per every LLC.

Forget about number of properties per LLC and think "amount of equity". If you have 5 properties with about $5k in equity each, your LLC's net worth will be roughly $25,000. Not bad, but not exactly a great target for a greedy lawyer and plaintiff.

However, what if you have 5 quad-plexes each with $200,000 in equity? Should all 5 go into ONE LLC? I wouldn't recommend it (and neither would my attorney). He suggests forming a new LLC for roughly every $250,000 in equity that your property portfolio contains.

Just how many evictions do you plan to have? I've been landlording for well over a decade and have had ONE, count it, ONE eviction. That's not to say I couldn't have one next month, but there's a lot of people running around saying evictions are part of the business. That's like saying automobile accidents are a way of life. Sure, they happen all the time, to different people, and nobody is immune, but if you're not taking steps to make them a very small part of your own life, then you shouldn't be driving... or landlording.