Is it worthy to set up a company to manage rental?

Is it worthy to set up a company to manage rental? by Anonymous (CT) on April 14, 2012 @23:48

I own two rental properties in CT. I am wondering if it is worthy to set up a company (DBA) to manage them. The benefit is, maybe, better insurance converage, etc

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Re: Is it worthy to set up a company to manage rental? by Libby (Pa) on April 15, 2012 @07:44	[ Reply ]

I have one apartment building 24 units. I set up a LLC. If you are sued they can't come after your personal assets.

Re: Is it worthy to set up a company to manage rental? by Eric (MN) on April 15, 2012 @08:25	[ Reply ]

I have an S-corp that manages all my 24 rentals. Each rental building is owned by a separate LLC. MUCH better for libility protection, MUCH better for tax purposes.

Re: Is it worthy to set up a company to manage rental?

Re: Is it worthy to set up a company to manage rental? by Jake on April 15, 2012 @10:19	[ Reply ]

Have you consulted your insurance agent about the insurance coverages to see if any advantage exist?

Re: Is it worthy to set up a company to manage rental? by outabout (CO) on April 15, 2012 @21:44	[ Reply ]

For those who put their rental assets in a LLC, you want to very careful following good business practice, especially separating business from personal expenses/assests. The recent trend has been that it is getting easier to pierce the veil. Traditionally, to pierce a veil, the court must conclude (1) the corporate entity is an alter ego or mere instrumentality; (2) the corporate form was used to perpetrate a fraud or defeat a rightful claim; and (3) an equitable result would be achieved by disregarding the corporate form. However, in Feb 2012, Colorado Court of Appeals affirmed the owner of a single member LLC personally liable for a judgement against the LLC, therefore piercing the LLC veil, without sufficient evidence of #2 and #3 above. http://www.llclawmonitor.com/2012/03/articles/piercing-the-veil/colorado-court-of-appeals-pierces-the-veil-of-singlemember-llc-with-no-showing-of-wrongdoing/

Re: Is it worthy to set up a company to manage rental? by Anonymous (MD) on April 16, 2012 @02:35	[ Reply ]

Thank you very much. I see. I think I would need to list factor matrics to make a decision on this. Thanks again!!!

Re: Is it worthy to set up a company to manage rental? by P-Bone in WNY (NY) on April 16, 2012 @07:33	[ Reply ]

Keep in mind a few key facts. Some courts require independent lawyers to represent LLC's or business entities. You may not be able to represent yourself as the owner in these situations. Of most importance, if you cannot fully capitalize the business entity, you likely will not be protected. What I mean by that is if the house is in your name and the mortgage in your name and you don't put an equal amount of capital in the business to cover the liability, likely, the veil will be pierced. If you can afford to capitalize the company enough to cover the mortgage, it might be beneficial to get the company its own line of credit to possibly obtain better coverage.