Should You Put Your Rental Properties in an LLC?

The answer is- maybe. But maybe not.

My upfront disclaimer is that I am not a legal expert of any sort, nor am I a financial or tax expert. I can only tell you, as an owner of rental properties, my experience in researching LLCs as a potential entity structuring method and the results of that research. You should not make any decisions regarding the structuring of your properties without consulting an expert in the field.

Whether you should put your properties into an LLC or not depends on your situation and what your goal by doing so is. How many properties do you own, what states are they in, are you just wanting the legal protection from the LLC, would it benefit your financing options, or do you just want to sound cool and say you own a company?

I say that last one with all sincerity but in my experience, that last one is a big driver for investors. Maybe it’s not that you necessarily want to seem cool because you own a company but because you just assume that you should create a company to hold your properties. Shoot, I thought that at one time. We hear about it a lot, we hear the gurus talk about asset protection, so we assume we need it. No harm, but let’s get educated first.

Benefits of an LLC

Why pursue an LLC at all? An LLC can offer both asset protection and tax advantages.

  • Asset Protection. I think this is the big one that drives investors to pursue an LLC. The big liability with a rental property is if a tenant slips and falls and wants to sue you. You know …read more