Do You LLC?

[Davin Ramage]

In beginning my investment career, am i better served to have an LLC?

[Steve Vaughan]

Thanks for clarifying some @Davin Ramage.

So you will be buying little residential houses? With debt, right? The asset type is sooo important. Many pound their fists and say LLC no matter what, especially attorneys.

Before you put a little house into an LLC, ask lenders what they will allow and what they will require. You will find higher down payments, higher interest rates, variable interest rates and shorter, callable terms.

You will have to put commercial financing on a residential house.   All the sweet fixed rate 30-yr terms 'people' get will not be available to you.

Also check with insurers.  A normally easy and comprehensive policy now may be much more difficult to obtain, expensive and limiting.  

In the name of 'asset protection', you will get crummy financing and limiting insurance.  

I just act above board with good insurance on houses in our own name.  Over a dozen years with over a dozen houses and no problems.   I will put them into an entity when I pay them off, though.    

Again, seek legal advice.  When they scare you about tenant lawsuits, ask the probability and circumstances of landlords being successfully sued that have debt on their property. We have to weigh the worst case scenario against the probability of it actually happening.  Having debt on the house is a form of risk management in itself don't forget.