Help! Looking into forming LLC for my rentals.

[Alexander Vest]

Hello BP community!

I need some advice on how to structure/if i should form an LLC/series LLC/s-corp/etc. I am a new investor in Tennessee and purchased a duplex with a FHA 3.5% down loan, so there still is a mortgage on the property. I am finishing up the renovations which should boost the equity when it reappraises. I might want to use the equity for another property in the future. I have been house hacking the duplex to fill my obligation for me to be a resident at the duplex for one year. Now that a year has passed, when I finish the renovations I would like to rent out my side. Before I buy another property I was thinking that it might be a smart move to put the house into a LLC to create a large amount of asset protection, I already have a umbrella policy on the house as well. So should I move the house to a LLC? or some kind of business entity??? Also what will be the process with my lender for the mortgage, and do I have to transfer the mortgage to create a LLC?????

[Mike McCarthy]

@Alexander Vest there's a lot of discussion and disagreement about this topic, but I personally don't feel that an LLC helps a small investor very much. If you're managing the property, the mortgage is in your name, the LLC won't really provide the asset protection you think it might. If someone gets hurt, you're going to be personally named regardless.

So I feel that it’s best to have good landlord insurance, umbrella insurance, and keep your property in good repair.

Once you hit the point where a bank won't give you a conventional loan (around 5-7 properties for most people), then start your LLC and commercial loans.