You Don’t Need an LLC to Buy Rental Properties (Here’s Why)
Episode Summary:
There’s a common myth in the real estate investing world: that you need an LLC to buy your first rental property. That before you even think about analyzing a deal or touring a duplex, you should form a company, file paperwork, and spend hours debating whether Wyoming or Nevada gives you the most anonymity.
Spoiler alert: you don’t need an LLC.
In fact, worrying about one too early might be the very thing holding you back from getting started.
This isn’t legal advice. I’m not a lawyer. But I am someone who’s actively building a portfolio of rental properties — and I don’t use an LLC. Here's why.
1. Liability Protection Comes From Insurance, Not Paperwork
One of the biggest reasons people consider an LLC is liability. "What if a tenant sues me?" is a valid question. But here’s the truth: your landlord insurance policy already covers this. And if you want extra peace of mind, you can get a personal umbrella policy for an additional layer of protection.
For example, I carry both: landlord insurance and a $2M umbrella policy. That means if something goes wrong on one of my properties, I’m protected. Not just kinda protected. Fully lawyered-up, insurance-backed, peace-of-mind protected.
If you're stressing about a slip-and-fall lawsuit before you've even bought your first deal, take a deep breath. Then go get a good insurance policy.
2. LLCs Make Financing More Difficult (and Expensive)
Here's what most rookies don’t realize: you can’t get a conventional 30-year mortgage with an LLC. Banks don’t like lending to businesses the same way they do individuals.
That means if you buy a property under an LLC, you’ll likely be stuck with a commercial loan. Higher interest rates, shorter terms, balloon payments. Not great.
The 30-year fixed rate mortgage is the superpower of residential real estate investing. Don’t give that up just to feel more legit.
3. Most People Set Up Their LLCs Incorrectly Anyway
Another curveball: lots of new investors set up an LLC but buy the property in their personal name. Or they finance it personally, then move the title into the LLC. That mismatch? It can void your liability protection.
Lawyers call this "piercing the corporate veil." Sounds fancy. Basically, if your insurance or financing doesn't match your LLC, you might as well not have one.
Don’t go through all the motions of setting up an LLC just to end up exposed anyway.
4. The Real Risk? Never Getting Started
Too many people spend months researching LLC structures instead of analyzing deals. They’re trying to look like a real estate investor instead of becoming one.
Let me be blunt: setting up an LLC doesn’t make you a real estate investor.
Buying your first rental does.
You can always add the LLC later. You can always clean up the structure after you’ve built momentum. What you can’t do is build financial freedom from the sidelines.
5. When an LLC Does Make Sense
Now to be fair, there are times when an LLC makes a lot of sense:
You’re investing in commercial properties (5+ units)
You’re investing with partners or outside capital
You’re building a large portfolio and want to separate properties by entity
But if you’re buying your first single-family rental or duplex?
You probably don’t need one.
Final Thoughts
The journey to financial freedom is hard enough. Don’t overcomplicate it.
Get educated. Analyze deals. Buy your first rental. Get a solid insurance policy. Add an umbrella policy if you want more coverage.
And stop letting the LLC question be the reason you never get started.
You don’t need an LLC to build wealth through real estate.
You need action.
Stay committed to the journey, my friend. Your future self will thank you.
Want to Take the Next Step in Your Real Estate Journey?
If this post resonated with you, let’s connect! Find me on Instagram @cashflowsaga to chat about your financial freedom goals—I’d love to help however I can.
Looking for more resources? Download my free investing tools or explore my 1:1 coaching program, Rental Property Investing 101, to fast-track your success.
Stay committed to the journey, my friend. Your future self will thank you! 🚀
