Landlordology has a nice overview of some issues to consider if you are considering putting your rental home inside an LLC. Read the article here. From personal experience I will say that triggering the due on sale clause by forming an LLC is theoretically possible, but practically I have never ever seen it happen. Lenders can barely figure out how to service their loans properly in my experience. Also, you are going to really want to pay attention to the last paragraph: getting competent input. I have spent a boatload of money and time and the number of advisors that seem to be truly competent in these matters that I have met I can list with 3 fingers on one hand (maybe I need to get around more). Other issues to add to the articles list: What state do you form your LLC in? Big big differences in terms of how LLC's are treated state by state. How many properties are we talking about? If you have a few, then maybe it makes some sense. But when you have a LOT, then if you do this the wrong way, it can get very pricey to file tax returns for all the separate LLC's and you may find yourself wondering if all this protection was such a good idea. There are some innovative ideas out there for setting up serial LLC's inexpensively and quickly (called 'series LLC') but you want someone who knows their stuff advising you on this. I personally like the input given by Diane Kennedy, who has a lot of real estate experience. See her blog for one of her businesses here
