Should we acquire an LLC while House Hacking?

[Asare Nkansah]

My wife and I are moving into our house that's south of Denver (Castle Rock) with the intention of househacking it. There's a mother-in-law's suite in the basement that can be accessed through a separate external entrance. 

We are planning on implementing the STR strategy for this one, in the next month or so by putting the basement on AirBnB. I've received mixed advice about whether we need an LLC or not. After talking to a few legal professionals, it seems like we can take two different routes:

1. Create an LLC and put the property under it

2. Get really good house insurance that covers a lot of STR related scenarios and create an LLC after we move out

Ultimately, we just want to be financially protected in case someone sues or something unexpected occurs with the STR. Any advice?

[Kenny Smith]

@Asare Nkansah

I would highly recommend getting additional insurance on the property first. If you are doing an STR, look for a policy that has a "home share" clause in there. I have one through liberty mutual, and I am not sure any of the other big insurance companies offer it, but I could be wrong there. Do some shopping, maybe contact an insurance broker that can do that work for you.

As far as an LLC goes, I'd say it can't hurt to create one and put your property into it. It also depends on what your future real estate goals are? Are you planning on moving out and buying more real estate? If so, I think it may be the best habit in creating an LLC for each property for ultimate protection. I guess it really depends on your risk tolerance, and what you are most comfortable with.

Best of luck!