Should you get an LLC for your Rental Property Investing?

Рет қаралды 13,401

Күн бұрын

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🎙️ Episode 348 - "You're creating the LLC to hold the property because if your insurance fails, that is your backstop." Attorney Clint Coons explains the benefits of an LLC, when to create it, and why it's safer for you to create one LLC per property earlier in your stage.
📄 Show Notes:
www.coachcarson.com/llcprotec...
▶️ Next Video:
How to Prevent 5 Expensive Real Estate Scenarios - Advice from my Attorney
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🎬 Topics Covered:
0:00 - Why you need an LLC
1:10 - What is an LLC?
10:45 - LLC vs other corporations
15:34 - Tax benefits of LLCs
18:02 - Clint's advice for beginners
22:53 - How self-management creates liability
26:20 - Insurance and LLCs
30:22 - General principles for LLCs
35:43 - Be cautious when getting an LLC
37:40 - How to connect with Clint
39:34 - How to Prevent 5 Expensive Real Estate Scenarios
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Пікірлер: 46

@worldwideachievers1234 17 күн бұрын

I’ve heard in some states if you have property in LLC then if you’re evicting a tenant you HAVE to have an attorney present instead of just yourself in a small claims court

@patriciakennedy3980 Ай бұрын

Very good educational session for real estate investing. Format of interaction assisted with keeping our interest,

@celsomatos8375 Ай бұрын

Only in America can you be an idiot on a bike and run into a car and still win a law suit against the driver

@annakay9483 25 күн бұрын

Thank you for this content! I enjoyed different perspectives on LLC. Question: if going with multiple LLCs, you must have multiple umbrella policies. This must be for bigger portfolio tactics. A few houses in one LLC makes more sense!?

@CoachChadCarson 23 күн бұрын

Good question. I think some insurance companies will allow you to use same umbrella policy over multiple LLCs if you or another LLC are the underlying owner of all of them. That keeps it simpler. But I personally haven't done the one property per LLC. Maybe I will change my mind but doesn't seem worth it to me yet

@rogerskillin8385 Ай бұрын

You can also place the LLC in a trust.

@koelg5858 Ай бұрын

I’m taking your class right now #46 💪

@CoachChadCarson Ай бұрын

Awesome! Thank you! 🙌

@jonathanlonneville5945 Ай бұрын

Hey Coach, I am curious what your personal strategy is in terms of LLC’s? I don’t currently have my properties in an LLC. I am still in the building phase. I have insurance on each property as well as umbrella insurance, but I haven’t taken the step to move anything into an LLC.

@CoachChadCarson Ай бұрын

I use LLCs. But I know a lot of people who've done just what you're doing for a time. Seems fine at first. But eventually I agree with my guest that it's a good move to switch over to an LLC.

@mjaldrich7 Ай бұрын

A LLC for each property? What’s the CPA’s tax preparation bill look like for all of that? Ouch.

@CoachChadCarson Ай бұрын

@@mjaldrich7 LLC per property is not my approach. Too much paperwork and hassle in my opinion. But others are willing

@Thom_Yorky Ай бұрын

Kinda off the subject a little bit but one of my rentals is the house next door to me. I'm thinking about selling the rental soon and don't want the new buyer knowing I own the house. The house is in really good shape but I don't want the new owner to constantly look at me if anything went wrong with the house in the future after the sale. Would putting it in a LLC work for that? Thanks

@bootsbooy Ай бұрын

I may be wrong so get a professionals opinion. You can if you’re will to lose a little bit of money in the creation of the LLC. The problem is, if you are the manager of that LLC, they’ll still see your signature on the paperwork when you sell

@tomrockefeller4620 Ай бұрын

The right insurance can protect you without all of these shell games. Setting up one LLC per property is very beneficial to the attorney. For the property owner, it's a hassle and expense. An LLC set up simply for asset protection? Good luck hiding behind that if you are truly negligent.

@jcsnsando Ай бұрын

@coach do you title your properties in the name of the llc?

@CoachChadCarson Ай бұрын

Yes, i do.

@od2437 Ай бұрын

If they find out you are the owner of the LLC, can they sue the LLC?

@terryt3281 20 күн бұрын

If an LLC isn’t the way to go in Florida, what is?

@janitoronfire Ай бұрын

Pierce that corporate veil.

@MrSethmo13 Ай бұрын

I’m only six minutes into the video and perhaps this is corrected later on, but your guest is mistaken. If you act negligently and damage/injure property/people, then when they sue you personally, and when they win a judgment against you, they can take anything and everything you own. True, you don’t own the rental property directly, the LLC owns the rental property. But you own the LLC and that is an asset that can be seized as part of a collection effort by a judgment creditor. The assertion that the LLC protects your rental property from your own personal acts of negligence is simply wrong. At least in Michigan where I reside.

@braedenmoses Ай бұрын

What if the LLC is structured within an irrevocable trust? Believe that is the optimum asset protection tool. Not to encourage negligence, that’s just bad for business, but to mitigate unnecessary risk and liabilities. Cheers

@MrSethmo13 Ай бұрын

@@braedenmoses If you have an irrevocable trust, then you don’t need an LLC (from the standpoint of personal liability protection). If your trust is irrevocable and you are simply the beneficiary, then you don’t own the asset (in this case, rental property) and you also don’t any other property property held by the trust. So if you get sued for personal acts of negligence, the trust and the property in the trust cannot be reached by a judgment creditor. Similarly, if someone gets hurt in the property, and they sue the trust, you have no personal liability. That injured party’s only remedy is whatever is in the trust. But if the property is held in an irrevocable trust, then you can’t control it. You can’t sell it. You can’t compel the trustee to deliver the rent to you. Whatever the terms that were put in place when the irrevocable trust was formed are the terms you will be stuck with.

@braedenmoses Ай бұрын

@@MrSethmo13 this could be a redundancy, however having the LLC structured within the trust would add a level of protection, particularly from an “asset search” mechanism performed by litigators when deciding whether to go through with a lawsuit to begin with. Also in an irrevocable trust if done correctly, the trustee, would be well, trusted and would be in line with your general wishes toward the property. Thus your ability to “control” would in reality be present but on paper be voided. Am I sounding reasonable in saying such? Far from my expertise..cheers

@MrSethmo13 Ай бұрын

Ownership of property is a matter of public record. An interested party can research the title to a parcel of land at the register of deeds in the county where the parcel of land is located. The title search will reveal that the LLC is the owner if the title is held by an LLC or the title search will reveal that the owner is a trust if the owner is a trust. If the LLC is the owner of the property, then there are further publicly available records that can be searched to identify the person or persons associated with the LLC. I don’t believe the same ability exists for trust. So, by owning the property in an LLC and then placing that LLC in a trust, you might be undoing the anonymity you would obtain by just owning the property in a trust.

@braedenmoses Ай бұрын

@@MrSethmo13thanks for taking the time, actually going through establishing my trust right now, will bring this up 👍

@TennisTD Ай бұрын

What about an umbrella?

@CoachChadCarson Ай бұрын

It's a type of liability insurance policy. With real estate, it covers multiple properties and not just one like a normal policy. And it only kicks in once the liability policy from the underlying insurance is exhausted. So, it's usually cheaper per $1 than that first policy.

@CoachChadCarson Ай бұрын

Sorry - I thought you asked what is an umbrella. But to original question, I have umbrella insurance policies and consider them an important first level of protection.

@TennisTD Ай бұрын

@@CoachChadCarsonyes. Me too. Why do I need LLC that cost me $800 each year per house. When the umbrella covers me for $300 a year

@tw2800 Ай бұрын

@@TennisTDThe umbrella doesn't prevent someone for suing you for your personal assets while an LLC does. Maybe do some research on what an LLC really does, or not it's your choice

@TennisTD Ай бұрын

@@tw2800 wouldn’t my liability insurance cover $500k then my umbrella 1 million. So, you are talking issues over 1.5million.