Should I purchase a multi-family under an LLC? First time commercial investor looking for guidance.
I have my sights set on an apartment building. It has 6 occupied units and some unused space that could be converted into additional units.   This will be the first property I have purchased, or even pursued aside from my primary residence.  I want to get some opinions on if I should form an LLC or other entity to purchase it under?  If this purchase goes well, I will consider additional properties.  
Please advise on the best strategies, thanks in advance!
[{"id": "he6jxxk", "text": "Following was thinking the same thing a couple of hrs ago", "replies": [], "depth": 1}, {"id": "he6mrul", "text": "Back in the day you would setup a Trust. Since around 2010 or so, I have seen more and more of my clients setting up an LLC. You may want to consider a separate LLC for each property. Reason being, if you were to ever get sued, only that specific property would be attached rather than all of the properties associated to a Trust or an LLC. Your personal residence should be in a Trust to protect from Probate. This is not legal advise.....", "replies": [], "depth": 1}, {"id": "he6n2iv", "text": "If you are going to get a commercial mortgage to purchase the property, then your lender may require that you purchase it in an LLC.\n\nIf you live in a state that allows it, it may be wise to form the LLC as a Series LLC so that you can have one entity but insulate each property from any others that you acquire.", "replies": [{"id": "he8r6vz", "text": "Video with all current states with series LLC https://youtu.be/UZaXL0PiSvM", "replies": [], "depth": 2}, {"id": "hht6jj7", "text": "Good stuff!", "replies": [], "depth": 2}], "depth": 1}, {"id": "he73z8i", "text": "Obviously. Sequester the collateral and limit liability, for only $20/year registration and some extra tax prep. Why wouldn't you?", "replies": [], "depth": 1}, {"id": "he7x17z", "text": "Absolutely\u2014limit your liability and be able to separate it from future investments.", "replies": [], "depth": 1}, {"id": "he84b4k", "text": "Make an appointment with your CPA.  That depends on other sources of income and tax rate. Good luck.", "replies": [{"id": "he8re5y", "text": "LLC is mainly for legal liability not as much tax liability", "replies": [{"id": "he8sdss", "text": "This", "replies": [], "depth": 3}, {"id": "heagn5u", "text": "This is the real reason", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "he8rb90", "text": "Yes. If you\u2019re getting a loan it\u2019s required, if cash, it\u2019s recommended. I\u2019m a CRE lawyer, happy to chat more.", "replies": [], "depth": 1}, {"id": "he8tgaz", "text": "You should purchase any investment real estate under a LLC. And a bank or credit union will require it. \n\nIf you'd like to PM me with the area I can send you my vetted contacts for lenders (credit unions normally don't have a prepay) and buyer brokers.", "replies": [], "depth": 1}, {"id": "he982iu", "text": "Yes.  I form a new LLC for every single project.  Further, you should maintain separate books, separate funds, separate accounts etc..What you don't need or want to have happen is one of your tenants falls out of a window because you didn't repair the broken screen in time and then they sue you for everything you are worth including personal assets.", "replies": [{"id": "heaonpq", "text": "This is the way.", "replies": [], "depth": 2}, {"id": "hfcgdak", "text": "Yes!  I\u2019m glad someone mentioned separate books and funds for the LLC.  A lot of people need to understand \u201cpiercing the veil\u201d and especially \u201ca unity of interest\u201c when setting up LLCs to limit liability.  So many SMLLCs aren\u2019t worth the paper they\u2019re printed on due to co-mingling of personal and business funds.\n\nA good intro: https://www.wolterskluwer.com/en/expert-insights/piercing-the-veil-of-small-business-what-the-owners-of-llcs-and-corporations-need-to-know", "replies": [], "depth": 2}, {"id": "hht6lnu", "text": "Makes a lot of sense.", "replies": [], "depth": 2}], "depth": 1}, {"id": "he9omc1", "text": "I'd purchase it in a trust or llc.", "replies": [], "depth": 1}, {"id": "hea4ja1", "text": "Yes, but if you're in CA, then you will have rent control, just because you own it as an LLC rather than an individual. It's still best to be an LLC in my opinion, but just deal with the rent control part of it in CA.", "replies": [], "depth": 1}, {"id": "heaokkj", "text": "Yes!", "replies": [], "depth": 1}, {"id": "hednz7v", "text": "Thank you all for the insightful responses!  Very helpful, much appreciated!", "replies": [{"id": "hew0ek4", "text": "Im a CRE developer and direct lender. Definitely keep everything separate. Also if you are looking for good first time loans: I have ones with no net worth or liquidity requirements.", "replies": [], "depth": 2}], "depth": 1}, {"id": "hegxfdp", "text": "For a commercial-sized deal (which this is since it\u2019s over 4 units) the norm is to create an LLC as a holding entity. \n\n(For 4-units and under, the norm is the exact opposite - you almost never see an LLC owning mutlifamilies).\n\nThe easy answer is yes, form the LLC. \n\nThe more pertinent question IMO is which lender to use? A bank? An agency lender? Terms and payback options will vary quite a bit. Many up-front charges are waivable. Plan to spend a great deal of time lender shopping and even once you\u2019ve found your lender, there will be quite a bit of head scratching  as to what loan is best for you. (Interest only periods, Pre-payment penalties, Amount of leverage, etc..). \n\nMake sure you understand the initial term of the loan and whether there is a prepayment penalty that is still in place at that reset date in case you want to refinance with another lender. Some commercial loans have a ten year pre-payment schedule. Some have five. (Obviously the fewer pre-pay restrictions you want the more you pay in interest.)\n\nI will say that on commercial loans the operator experience does factor in to underwriting. So just be aware of that. Don\u2019t needlessly portray yourself as a newbie when submitting documents and loan shopping. \n\nAnd be prepared for Covid escrows or other shoe term add-ons. I know Freddie and Fannie both had large (12-month) Covid escrows a few months back when I was refinancing my commercial buildings. \n\nBest of luck!!", "replies": [], "depth": 1}, {"id": "hfyefac", "text": "New corp for every acquisition/project. Limit your liability. \n\nEven my personal houses are in an LLC.", "replies": [], "depth": 1}, {"id": "hhxtcyj", "text": "Definitely. You want that asset and operation separate from you. Learn anonymity as well.", "replies": [], "depth": 1}]