Should you put your rental property into an LLC or corporation?
Attorney Tom Olsen: Hey Rob, while in your landlord workshops have landlords talked about whether they're holding their rental properties in their individual name versus an LLC as a form of asset protection?
Attorney Rob Solomon: Right. They do and it's a popular topic, particularly among landlords who own multiple pieces of property. I often get this question about what are the benefits of owning rental property in a corporation or LLC, especially when the landlord owns multiple pieces of property.
You know better than I do the benefits of incorporation and what I also need to tell people are the costs of incorporation. Not the legal cost, that's relatively doable as you know, but the repeating cost, the filing, the taxes. All of those things have to figure in to the equation of whether or not it makes sense to have that extra liability protection. And it certainly does when you're operating a business. When you're a mom and dad operation and you own extra piece of property? I'm not so sure. What do you think?
Attorney Tom Olsen: When a client asks about putting their rental property into a corporation or LLC, the first thing they need to do is call their insurance agent and make sure they will continue to insure the property if it's owned by a corporation or LLC versus in your individual name.
Attorney Rob Solomon: And I also say good insurance policies make you sleep so much better.
Attorney Tom Olsen: I always tell clients that, if they've accumulated wealth, their best defense for asset protection is to be well insured, including even having an umbrella policy.