Recommend LLC or Keep Under Living Trust

[Danielle Tran]

Hello BP Community,

I'm exploring options for a commercial property in Long Beach, CA currently held in a living trust. I've noticed many investors choose to transfer such properties to an LLC for legal reasons. If a property is transferred to an LLC, would that trigger a new appraisal for property tax? Would it be better to keep the current structure under a living trust or pursue the LLC route? I appreciate any advice!

Thank you,

Danielle

[David M.]

@Don Konipol in addition to what @Chris Seveney said, also there is the financing cost. Legal entities aren't eligible for conforming loans. Now with a LLC you need commercial lending. Yeah, with the big push to dscr the rate differential isn't as bad, but its still there and so is the difference in terms.

Also, people don't know how to operate the LLC. So, it can be a sort of "false protection."

So, yeah it might just a few hundred dollars to form the LLC, but its the additional overhead costs (e.g. separate bookkeeeping) that really drive it up. We see plenty of posts of people trying to get around "doing it right" with a LLC. As a layman, I just see so much alledged co-mingling and alter-ego use...