I have 3 properties. I was told that I should setup an LLC. I don't know anything at all about them. Pros, cons, cost? I have my primary home and 1 rental, in Cal. The other in Tx. Thanks.
Who knows LLC's?
- Thread starter daves66nova
- Start date
They aren't hard to set up but I did have a lawyer set mine up. I would have a lawyer set it up especially since property is involved. It gives you some protections from lawsuits and makes the business side of things easier and harder.
Ok, so they basically protect you from getting personally sued?
There is more to it than that. Normal business stuff and such. It has been six years since I set mine up and quit doing business so I don't remember. Obviously if you do something negligent an LLC isn't going to protect you.
People get suckered into getting an LLC because they supposedly do something for them. Nothing will prevent you from getting personally sued if someone decides to file a suit against you. However, an LLC might, maybe make you more judgment proof.
Most of the benefits of an LLC go to whoever talks you into spending a bunch of money on them to help you set up the LLC.
Who is advising you? For the rental, it makes sense, but maybe not for the others.
Most attorneys use a service out of delaware. It's easy to setup, but somewhat of an admin hassle to transfer the properties to the LLC. If there is a mortgage, the bank may prevent it from happening.
As others said, anyone can be sued. But it adds another layer of protection between and a claimant.
Most attorneys use a service out of delaware. It's easy to setup, but somewhat of an admin hassle to transfer the properties to the LLC. If there is a mortgage, the bank may prevent it from happening.
As others said, anyone can be sued. But it adds another layer of protection between and a claimant.
Landlord here. The general consensus among landlords is to get an umbrella policy. Will be about the same or cheaper than an LLC. In theory an LLC is supposed to protect you from liability, but it's not that hard to pierce the veil and in any lawsuit you could also be personally named in addition to the LLC. Also as someone mentioned, the price of an LLC also varies by state, I haven't checked mine lately but it used to be something like $400 to set it up and $400 a year to keep it going. It's cheaper in other states like Delaware or Nevada. But if you get a 2-5 million umbrella policy, that should pretty much cover you from any future liability.
I just have an umbrella policy that covers my rentals. It's$200/year for 1 million. You will need to bump up coverage on your Auto, Home Owners to $250,000/$500,000 however-that's the minimum to qualify for an umbrella.
