In today’s real estate market, many homeowners are opting to purchase a new home and convert their current house into an investment property. Whether handling the renting process themselves or using a property management company, it’s not unusual for the business structure regarding ownership of the rental property to be overlooked.
If you own your property as an individual and someone files a lawsuit against you, then your personal assets are at stake. Creating an LLC to own the rental property allows your rental property and your personal assets to be separated, affording you protection from debt or costs associated with being a landlord. If you create an LLC, then the assets at stake are those owned by the LLC and not your personal finances.
If you have multiple rental properties, it may be wise to have each property owned by a separate LLC. If someone files a lawsuit against one of your properties, the other properties owned by separate LLCs would not be affected. This allows for the separation of assets and protects each of your properties.
To better track expenses and repairs related to each property, it may be a good idea to set up separate bank accounts. Your accountant should be consulted on how best to set up and monitor accounts.
At the Law Office of Sativa Boatman-Sloan, LLC & 417 Elder Law, we are here to help you navigate and understand the legal documents involved in rental property.