Rental unit in new home: tips on a new LLC?

[David Judge]

Hello, I recently built a home with a segregated portion that I am about to rent out (July 1). I am looking feedback on my strategy. Do I need to find a RE attorney and CPA for this, or is it fairly straight forward? I am in a time crunch as I assume I can't list and show the property until I have the legal framework established. Thanks for the feedback!

1. Form an LLC:
   • Purpose: Establish a separate LLC for the rental portion of the unit.
   • Ownership: Lease the rental space to the LLC, which will handle all rental income and expenses.
     
2. Lease Agreement:
   • Internal Lease: Create a lease agreement between myself (as the homeowner) and my LLC (as the tenant renting the rental space). This formalizes the relationship and segregates the rental income from my personal income.
3. 
   Banking and Accounting:
   • Separate Accounts: Open a separate bank account for the LLC. All rental income should be deposited into this account, and all expenses related to the rental property should be paid from it.
   • Accounting Practices: Maintain separate books for my personal finances and the LLC's finances. This includes keeping detailed records of all transactions.
4. Mortgage Payments:
   • Handling Income: The LLC can pay the rent for the use of the rental space, which I can then use to help pay off the mortgage. (rent payment at fair market value.)
   • Loan Payments: Ensure the rental income paid by the LLC is used for mortgage payments, clearly documenting the transactions to avoid co-mingling of funds.
     
5. Insurance:
   • Landlord Insurance: Obtain a landlord insurance policy for the rental portion of the home through the LLC.
   • Homeowner's Insurance: Maintain a separate homeowner's insurance policy for my personal residence.