This is probably the main incentive for investors have rental properties in an LLC. One of the major reasons LLCs were created in the first place was to limit personal liability. So let’s try to break it down a bit with a classic advantages/disadvantages list–one for the LLC, and another for simply increasing your insurance coverage. Once you’ve weighed the options, the answer to your situation will hopefully become more clear. So, should you put your rental properties into an LLC? Well, the answer is. The old saying, “Never ask a barber if you need a haircut,” seems to hold true. If you ask an insurance agent whether you should increase your liability and umbrella insurance instead, they’ll say yes. If you ask an entity lawyer whether you should form an LLC, they’ll say yes. But finding unbiased advice on this question can be difficult. For some, it may be better to simply increase your insurance coverage. There are many factors at play, particularly asset protection and taxation issues, that need to be considered before making this decision. Unfortunately, it’s never completely cut and dry. LLCs can be a great way to protect yourself and your assets, and as an owner of several rental properties in various states, I’ve pondered this question myself. I see this question posed quite often on related forums, as well as on the Passive Income Docs Facebook Page.

If you have rental properties or are looking to purchase some, the question of whether or not to form a Limited Liability Company (LLC) has probably come up at some point.

Should you form an LLC and put your rental properties in it?

Real estate passive income