I'm not a fan of online places for getting legal documents, of any kind. They are very boiler plate to typical businesses who are really looking for a name to run under. Real estate is anything but typical, and the focus is either asset protection or tax savings. Online places won't guide you through or ask you the right questions to get what you really need. Most don't even have provisions for charging order protections, prohibitions on transfer on membership, management, and other clauses we use to beef of the asset protection side of things. They aren't as cheap as they appear to be with add on costs, and to the point where they aren't much less than having an attorney do them. Also, if there are issues, you have no one to go back to or stand behind the documents.
And, they aren't as easy to pierce as most people say. There are a million "stories" and blah blah about not putting properties into LLCs and just have insurance. They are just stories, and usually by older investors who got in the game before LLCs were common place. I have a long list of clients who's insurance didn't cover the claim. And while insurance is a definite must, using LLCs to protect yours personal assets, AND the asset inside (there are TWO kinds of protection that most people don't understand) is worth the small, one time cost of having an LLC.
While you can do things that will reduce or eliminate your protection, running and managing a LLC appropriately is quite easy. We educate all our clients, and even help them, run their company by the books. Not commingling funds is super easy. We have hours of "corporate governance" videos on our website to teach you if you really want to learn. Again, you educate yourself in real estate investing, it's not hard to educate yourself in running a business. Horror stories are for the movies.
The LLC also provides a professionalism, AND privacy to your endeavors. I sure as hell don't want my tenants knowing I'm the owner of the house.
And don't wait until you have a lot of rentals. It's easiest to learn when you start right from the very beginning and learn to do it right--especially when the stakes are not as high. Get one rental, put it in an LLC and learn how to run it properly. Get comfortable with your new business. Then let your legal side grow as your investing grows. Easy!
Seriously, this really isn't even worthy of discussion. With the exception of CA, setting up, running and using an LLC is not expensive and pretty damn easy to do right.
I'm always happy to help you out.
Happy investing!
Jeff
