I have two properties, one in state and one out of state, rented out. I have rental dwelling insurance for both of them. Is this enough? Should I put both under an LLC? Do I need to get the title changed if I do that?

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Max out liability insurance on your landlord policy (it’s surprisingly a cheap increase). I wouldn’t risk doing quit claim right now if you have a low interest rate. Gives banks an excuse to accelerate your mortgage. And quite frankly, it’s really not worth it when you only have 2 imo due to yearly fees

LLC is only to protect your other assets. Insurance is your main defense. If you’re paranoid, get an umbrella policy which is like $100-300 for most people for another $1m or $2m

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Yeah all the attorneys saying put ‘em in LLCs for liability protection… good advice in principle and one I always took, until in my practice I started suing LLCs and realized how amazingly simple it is to pierce the veil. If it’s a sole owner LLC, there are precise hoops you have to jump through to ensure you’re actually protected individually. No, and I mean zero, commingling of funds between the LLC and you. So as others said, if it’s a smaller property (sounds like they are) or you don’t have multi million net worth etc, just max out your liability and get an umbrella policy.

How big are these properties? That is, how many units? To me, each property needs its own LLC in the state where the property is situated (unless you have a state where series LLCs are permitted). In my experience, you’d need to convey a quitclaim deed to the new LLC and notify the insurance company. One thing to watch it for—you may trigger an acceleration clause in your mortgage if you transfer to an LLC (I did it anyway on a duplex I used to own, and never had any negative repercussions, but it is an issue). A land trust is a second best option, but I would never rent out a property that I owned personally. That said, I actually don’t own anything personally aside from membership interests in LLCs and shares in an S-Corp.

smart

What state? I’m only asking because if you’re in the handful of states that permit series LLCs it would be easier.

You should consult an attorney and an accountant that have experience with real estate ventures.

I’m a corporate attorney and don’t do much with real estate holding companies, but as a starting point I’d say you should consider a separate LLC for each property possibly owned by a third LLC which is owned by you. Like I said, I’m just a corporate attorney and this isn’t a substitute for legal advice from your own attorney that you’ve retained, but that’s what makes the most sense to me.

I have an umbrella policy as well.

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