Do I need an LLC, or is Landlord Insurance enough?

[Warren Shinnamon]

Hello! I own a single-family house in Portland, OR in my name. Purchased in October, 2021, for $528,000. 30-yr fixed rate mortgage at 2.875%, $85,000 down payment. Currently ~$425,000 left on the mortgage. WIth property taxes and insurance, my monthly mortgage payments are roughly $2,290. I have put about $66,000 into various repairs and improvements.

I am looking to move in with my girlfriend (who also owns her own house) and renting out my current house. My main goal is to maintain the house and preserve my asset, especially given the low interest rate. I am not particularly concerned about making a profit. I intend on hiring a property management company so that I can rest assured that things are being taken care of. Again, I am not very concerned about making a profit, just want to make sure that the house is taken care of and I break even.

I am learning more about the benefits of creating an LLC for my rental operations, even if it is just one house. However, I am worried that the holder of my loan will not let me transfer the current mortgage to the LLC without refinancing. I have not yet reached out to my loan holder to find out for sure, because right now I am trying to explore all possibilities before getting them involved. I desperately want to be able to maintain my current mortgage at the 2.875% rate. The question is, do I NEED to form an LLC? Or would Landlord's Insurance be enough for my needs?

[Costin I.]

@Warren Shinnamon 

If you are new to REI you should be primarily concerned with finding good deals and growing your business first. I would not suggest looking into establishing LLCs and asset protection strategies till you have at least $100-300K in equity (!) and only after you covered the "other" aspects of risk management (insurance, umbrella insurance, proper property management, etc.).

Here is something to help assess the need for asset protection, and what to implement - my Asset Protection Decision Diagram : https://www.biggerpockets.com/files/user/CosIorg/file/asset-protection-decision-diagram

Asset Protection Onion Diagram - what, when and at what cost one should implement in terms of asset protection - https://www.biggerpockets.com/files/user/CosIorg/file/asset-protection-onion-diagram-v2

What is needed for a complete asset protection OR the domains that need to be intersected to find asset protection. - https://www.biggerpockets.com/files/user/CosIorg/file/asset-protection-spectrum-diagram

How a fully implemented asset protection layout might look. - https://www.biggerpockets.com/files/user/CosIorg/file/asset-protection-structures

Thanks

Costin

PS. Read this book - https://www.amazon.com/Every-Landlords-Property-Protection-Guide/dp/1413307000 - before getting into more complicated and expensive measures of protection.