Putting Properties in LLC's

[Caleb Rehg]

I am just starting with real estate investing and have a property under contract. I know I have to get this property into an LLC for personal protection purposes, but I'm not sure how. I know a little bit about the due-on-sale clause, but that's about it. Do I need to have discussions with lenders to see if they have that clause in their underwriting or is there something else, I could potentially do? Any information/feedback is greatly appreciated.

[Bill B.]

Why? Why do you need to get this property in an LLC? Obviously there won't be any privacy gained. There will be no tax advantage. And there will be virtually no asset protection. Imagine you are the one small LLC owner who gets all the paperwork and operations right to prevent piercing of the corporate veil. Explain to me a way in which your property will hurt someone that will be your LLC's fault but not be your fault? This is the only case in which you won't also be sued.

You are adding costs and complications for basically zero benefit. If you personally are worth more than $500k - $1million, get an umbrella policy, job done. If not, what are you trying to protect? Your basic insurance policy should cover the first $300-500k.  

Some day they'll do a survey and figure out how many of the thousands of BP members have ever been SUCCESSFULLY sued on their 10's of thousands of properties. And then what percent of them were saved by their LLC. If we narrow the results down to 1-4 unit properties I'm willing to bet IF the number is higher than zero, it's lower than 10.

You personally are at LEAST 10x, probably 100x more likely to be sued for a car accident than your property. This is why you have the umbrella policy, IF you ar worth suing.