All Forum Posts by: Frank James Batignani

I have 5 properties (4 SFH and 1 multi-unit, co-owned) and no LLCs, still debating whether to get one. I also know many California investors who own a few million in properties, no LLCs, one reason being CA charges a $800 franchise tax per LLC. I talked to two asset protection companies, Prime Corporate Services and Anderson Business Advisors. Both recommended a Wyoming Trust over a Holding Company over each LLC (ideally one per property). The first year set up is over $13,000 in my situation with Anderson and yearly fees after that. That's super expensive. I would recommend finding an attorney over Anderson or Prime (have heard mixed reviews about them) if you decide you want to get an LLC.

The reason for Wyoming is that you get a registered agent and a virtual business address for anonymity and no one can track you down (e.g. tenant trying to sue you, if you're at fault in a car accident and the other party is trying to sue you). These companies also prey on people's fears. Umbrella insurance (beyond the liability insurance for each rental dwelling) is far less. For example $427 a year for a $2 million umbrella policy and I'm in the most expensive part of California. 

I think if you have a commercial loan you might need to get it in an LLC or with some DSCR loans. With a conventional loan you have to get it in your personal name - some people later do a quit claim to their LLC. Just make sure you ask your lender and tell them in writing you're doing that - they can technically call the note due (both my lenders said it was ok to have the title changed to an LLC) but this doesn't happen often. Also if your LLC isn't set up correctly it can be pierced (piercing the corporate veil).

My opinion is that for one property I wouldn't get an LLC. Unless you're in a situation where you're at high risk of being sued like a doctor or you have a lot of assets and people are after you, I don't think it's worth the extra hassle. #1 Follow the laws where your rental is, #2 make sure everything is up to code #3 do any repairs promptly #4 get plenty of insurance - doing all this will avoid 99% of lawsuits (in other words don't be a slumlord). If you do a search for LLCs on BP, you'll see a range of opinions - it depends on your individual situation and risk tolerance.

For 2024 if you have an LLC you have to file additional paperwork with Corporate Transparency Act or face fines from the IRS. Good luck.