For Landlords
Should You Put Rental Property in an LLC?
Usually yes, and the reason is specific: a tenant claim against a property you own personally reaches everything else you own. There is one thing to check with your lender first.
Form your LLC, $399 all inMost landlords should hold rental property in an LLC. A tenant injury or habitability claim against property you own in your own name can reach your home, savings, and other properties. An LLC contains the claim to the property that caused it. If the property carries a mortgage, check the due-on-sale clause with your lender before transferring title.
Why landlords are unusually exposed
Rental property combines two things that rarely appear together: a physical premises you do not occupy and do not control day to day, and a legal duty to keep it safe for the people who do. A stair rail, a smoke detector, a mould complaint, a dog bite in the yard. Owning in your own name means every claim arising from any property reaches every asset you have, including your other rentals. An LLC draws a line around the property, which is also why landlords with several properties often use more than one company rather than putting them all in a single entity.
What you are actually exposed to
Tenant and guest injury
Falls on stairs or ice, faulty wiring, a balcony rail. These are premises claims and they follow the owner of record, not the property manager.
Habitability and mould claims
Failure-to-repair and mould disputes are among the most expensive claims in residential rental, and they often arrive as a group claim from multiple tenants.
One property reaching another
Hold everything in your own name and a judgment on one property can be satisfied out of another. Separating them is the point of the structure.
Security deposit and eviction disputes
Deposit handling and eviction procedure are tightly regulated, and getting either wrong creates statutory penalties in many states.
Check the mortgage before you transfer
This is the step landlords most often miss. Nearly every residential mortgage contains a due-on-sale clause letting the lender call the loan if the property is transferred, and moving title into an LLC is a transfer. Lenders frequently permit it on request and rarely call performing loans, but the decision is theirs, so ask before you file rather than after. Transferring title can also trigger transfer tax or a property reassessment depending on the state and county, and some cities require rental registration in the owning entity’s name. Confirm all three locally before moving anything.
How to set it up
- 1
Talk to your lender first
If there is a mortgage, ask in writing whether they will permit a transfer to an LLC you own. Doing this before you file avoids the only genuinely expensive mistake in this process.
- 2
Form in the state the property sits in
Property is immovable, so the state where it sits governs it. Forming elsewhere means registering as a foreign entity there anyway and paying in both places.
- 3
File your formation documents
We prepare and submit your Articles of Organization and track the filing to approval, with state fees included in the $399.
- 4
Move the title and the paperwork
Deed the property to the LLC, then move the lease, the bank account, the insurance policy, and the rent collection across. A company that does not receive the rent is not really holding the property.
- 5
Update the insurance
Tell your insurer the owner has changed and name the LLC on the landlord policy. A policy in your personal name over a property owned by a company is a gap that surfaces at claim time.
Questions landlords ask
Should each rental property have its own LLC?
Separate companies keep a claim on one property away from the others, which is the main reason to bother. The trade-off is that each company is its own filing, bank account, and annual report. Landlords commonly run one LLC per property once the portfolio is worth protecting from itself, and a single LLC before that.
Will my mortgage lender let me transfer to an LLC?
Often yes, if you ask. Most residential mortgages have a due-on-sale clause that technically lets the lender call the loan when title moves, and transferring to an LLC triggers it. In practice lenders rarely call a performing loan and many will approve the transfer in writing. Ask first, because doing it quietly is the version that goes wrong.
Does an LLC save me money on taxes?
By itself, no. A single-member LLC is disregarded by default, so rental income flows onto your personal return exactly as it did before. The reason to form one is liability separation, not a lower tax bill. Anyone selling it as a tax strategy is overselling it.
Can I put a property I already own into an LLC?
Yes, by deeding it across after the company is formed. The sequence matters: form the LLC, clear the transfer with your lender, then record the deed and move the lease, insurance, and bank account. Watch for transfer tax and reassessment, which vary by state and county.
Does an LLC replace landlord insurance?
No. The LLC decides which assets a claim can reach; the policy pays the claim. Without insurance a judgment can still take the property itself, which is the asset you formed the company to protect.
What does it cost to form an LLC for a rental property?
With StartGlobal it is a one-time $399 with every state fee included, covering formation, registered agent, and your federal tax number. After that you can stay compliant from $99 a year.
LLCs for other trades
Ready to form your LLC?
One flat $399 with every state fee included. Registered agent and your federal tax number come with it, and there are no upsells at checkout.