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Old 09-15-2021, 09:25 AM
 
1 posts, read 715 times
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I know that some people using LLC to hold a rental property to minimise liability, is it worth to do so? Set up cost of LLC in Houston seems not much, but I'm concerned the running expenses like tax filing etc.
The expected rental income is about $1,500 per month.

Last edited by mghyw; 09-15-2021 at 10:00 AM..
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Old 09-15-2021, 02:15 PM
 
467 posts, read 777,928 times
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Not worth it IMO
Get an umbrella policy for $150 / yr and call it a day
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Old 09-16-2021, 08:03 AM
 
Location: Katyzuela
38 posts, read 45,381 times
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If you are the owner of the LLC, then there is really no liability protection. Only real way to limit liability is to setup corporation, not a S-Corp, with directors and do not link to your personal bank accounts.



As other post stated, spend the money on insurance to cover you and/or any listed owners of properties
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Old 09-16-2021, 09:42 PM
 
219 posts, read 226,134 times
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Quote:
Originally Posted by dd1153 View Post
Not worth it IMO
Get an umbrella policy for $150 / yr and call it a day
If you get a mortgage for an investment property, how much does homeowners/property insurance cost compared to what you’d pay for your primary residence?
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Old 09-16-2021, 10:31 PM
 
Location: Houston
1,721 posts, read 1,020,704 times
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Originally Posted by clutchcity View Post
If you get a mortgage for an investment property, how much does homeowners/property insurance cost compared to what you’d pay for your primary residence?
I don’t think it matters. Insurance cost is based on the value of the house and the risk factors (i.e., beach houses in Galveston cost more to insure because of Hurricane and flooding risk).

There is a difference in property tax rate because you can only claim a homestead exemption for your primary residence.
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Old 09-17-2021, 08:30 AM
 
Location: Memorial Villages
1,512 posts, read 1,789,810 times
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When we converted our primary residence to a rental property this year, a landlord policy with comparable coverage to our previous owner-occupied policy cost ~50% more. I understand that this results from the face that tenant-occupied properties are more loss-prone than owner-occupied ones.

I could understand this, but was more irritated when our flood insurance increased by $225 because our home is no longer owner-occupied. How the heck does owner vs tenant occupancy impact flood risk? Even worse - a non-owned-occupied flood insurance policy doesn't cover contents, despite it costing extra! Government math at work...

Oh well, I guess flood insurance is effectively heavily subsidized anyways so I shouldn't complain.
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Old 09-18-2021, 06:42 PM
 
467 posts, read 777,928 times
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Flood insurance runs around $300 more for non-primary (not in a flood zone)

Property taxes do not receive any exemptions (homestead)

Interest rate on mortgage runs about .5% higher for the loan
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Old 09-19-2021, 04:48 PM
 
10 posts, read 5,102 times
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Quote:
Originally Posted by perro_peluo View Post
If you are the owner of the LLC, then there is really no liability protection. Only real way to limit liability is to setup corporation, not a S-Corp, with directors and do not link to your personal bank accounts.



As other post stated, spend the money on insurance to cover you and/or any listed owners of properties
I don't think this is true. The whole purpose of an LLC is provide the OWNERS with limited liability protection. Who else would need the limited liability?

I see a lot of misinformation here. OP, you're probably best off discussing with a business lawyer. There are definitely very big advantages of having a rental property through an LLC. I'm sure there are downsides also which you should discuss.
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Old 09-20-2021, 06:46 AM
 
Location: Katyzuela
38 posts, read 45,381 times
Reputation: 43
Quote:
Originally Posted by justanobody View Post
I don't think this is true. The whole purpose of an LLC is provide the OWNERS with limited liability protection. Who else would need the limited liability?

I see a lot of misinformation here. OP, you're probably best off discussing with a business lawyer. There are definitely very big advantages of having a rental property through an LLC. I'm sure there are downsides also which you should discuss.



Correct, LLC assets are used to pay off business debts, so LLC owners stand to lose only the money that they've invested in the LLC. Owners should be careful to not link personal accounts into any type of business, a good lawyer will locate this and claim that assets are joined, and go after those assets as well. This was my main point regarding non C-Corp entities, don't assume that simply because you have a LLC that it is insulated from your personal assets unless you are vigilant.



Do agree that discussion with a lawyer familiar with business setup is the best way to go. The umbrella policy covers all assets and provides additional protection in addition to standard policies on property

Last edited by perro_peluo; 09-20-2021 at 06:52 AM.. Reason: added additional point
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