LLC before buying first Investment

[Melinda Harris]

Hey Folks. I am a newbie investor in the DC, MD and VA. Is it a best practice to open up a business as a LLC or whatever other entity before you start buying your 1st investment property to protect yourself financially?

Any tips is greatly appreciated!

[Rod F.]

I would love to address this if I can ! First and foremost I am no lawyer! I have been sued personally for personal injury. The LLC protected my real estate holdings. To big of story to tell here publicly.

1. Jaron says "An LLC is not necessary. It's costs money and adds headaches for financing property."

It cost $50 to form in arkansas, on line with the State of Arkansas, takes about 30 minutes. I have done it multiple times for people.  (approx $250 with the lawyers.) All of my financing has been in house loans, with a personal Guarantee signed. The Bank is not who I Am worried about. 

2. Justin , All my investment properties are in my name. Easier (and better) in my opinion for financing. If you go LLC route, you'd need hard money or commercial financing.

After spending $25,000 in legal fees, losing a lot of personal assets. refinancing a paid for house that made me 10k on rental income. The Attorney suggested I never put my name on anything, harder to find me as owner, and easier to sell business. not selling my name at a later date. 

3. Matty, I couldn't of said it better!!! Your spot on. 

Insurance has it limitations, And all the repairs you can do doesn't protect you from what i call the IDIOT FACTOR!  The idiot factor was settled out of court for 7 figures in my case. 

All in all, talk to your real estate attorney, spend a couple hundred bucks, and protect your assets.

This is MY personal Experiences, I learned the Hard Way! The houses in my name were subject to grab (2),  The houses in the llc they didn't even consider (46).  I have learned everyone on here is an expert in there own experience and business. . 

But i know the $50 would have saved me 25K in legal fees and 75K in assets. and a loss of 8500 in rental income.