LLC worth it for small-time Resi investor?

[Alexander Churchill]

I’m 26 and fairly new to investing, I own 2 Rental properties, both are doubles and bought my first in 2017. I currently have a verbal agreement on a 3 unit and intend to sign paperwork this week. I don’t have millions in the bank or in or networth. I do own my own home which I just bought a couple of months ago and have about 20% equity in that. All of my rentals have about 25% equity in them.

Wondering if LLC is really worth it? Obviously aware of the ability to protect your personal assets, but are there any other really good benefits to it? Not to familiar with the tax advantages everyone is always talking about. Is it that important to set one up or is liability insurance enough? I have 500k liability on each rental

[Nathan Gesner]

The average Landlord will never be sued.

Even if they are sued, most of them will not lose the case.

Even if they do lose, the loss is significantly less than their liability insurance would cover.

So there's a very, very, very small chance that you'll ever be sued, lose, and lose enough that your standard insurance won't cover it. Umbrella insurance is extremely cheap because insurance companies know it will likely never be necessary.

I have 25 units and own them all personally. I have a friend with about 60 rentals all owned under his personal name. I'm not saying you shouldn't set up an LLC or purchase umbrella insurance, but you certainly don't need to panic about it.