To LLC or not to LLC?

[Tim Robinson]

Hi Everyone,

I'm a newer member here on Bigger Pockets and have a question that I'm asking somewhat retroactively hoping for some guidance on my next investment property purchase. My wife and I currently live in Europe and have 5 doors rented in the states, including a triplex in Baltimore that will be the topic of my question. The two homes we own in DC are financed conventionally on 30 year mortgages in our name. For the triplex we decided to incorporate an LLC under which to purchase the property to protect our own assets in the event of a lawsuit, etc.

In many ways I am regretting this decision as 1.) the rate I got on the commercial loan in order to finance the property was quite a bit higher than I would have been able to get on a conventional residential loan and 2.) the tax filing on this property was a bit of a nightmare this year (we just purchased the property last year). I did not realize that since both my wife and I are equal partners, the laws in MD require us to file a separate return on our "business" property. This led to incurring fees to help file for a separate tax filing, as well as a great deal on confusion about how to properly record income/expenses without a CPA over the coming year.

We are looking to potentially purchase a turnkey property in the next couple of months somewhere in the midwest while we are still living abroad, and I guess my question is, other than potential protection form lawsuits, has anyone found any other benefits to purchasing properties under an LLC? I have heard form people that once the property is paid off, it often makes sense to re-title it under your LLC. But are there any advantage I am missing to actually purchasing under and LLC?

Sorry for my long-winded first post but any guidance/experience is welcome.

Tim Robinson