Posted by Rich-CA on August 27, 2008 at 10:59:59:
In Reply to: LLC for Rental Property posted by Scott on August 27, 2008 at 08:40:23:
If the mortgage has the LLC name on it, then of course you will need an LLC.
I had started out with an LLC per property and another to manage the rentals. I have now changed to a Land Trust per property still using an LLC as manager in the state where the properties are located. These Land Trusts are owned by our parent holding company and a sizable umbrella policy.
The problem with an LLC is that its usefulness depends on the court cases in the state where it operates (notice I did not say the state where it was formed, you are most likely to have a lawsuit filed where the property is located and not where the LLC is unless you live in the same state and form the LLC locally. Regardless, you will have to defend your LLC wherever the lawsuit is filed.
If you want to use the LLC to hide ownership, then using a Land Trust with a name such as the property address will do the same thing, BUT your trust deed has your name on it if you used conventional financing and they will still be able to locate you. Its all on the web in TX and its easy to do the searches.
The liability insurance is what pays for your lawyer (or the LLC's lawyer if it is sued) so you require it in any case. It should be large enough to make sure the insurance company does not just settle and drop you or jack up your rates. They do a cost benefit analysis on every lawsuit to see if its worth it to fight and the amount they have on the table weights that in your favor.