Should You Put Your Short-Term Rental in an LLC? Let’s Break It Down

Kate Stoermer Author

Should you put your STR in an LLC? Learn 4 layers of protection + get the Roadmap, Excel calculator & my top insurance pick (Waivo)

📺 Watch the video below to hear me break this down in detail:

Deciding whether to buy or move your short-term rental (STR) into an LLC is a common—and important—question for Airbnb hosts, short-term rental owners, operators and investors. But the better question is:

“How protected are you?”

This blog breaks down the four levels of protection every STR owner should consider:
Rental Agreement • Insurance • Legal Structure • Business Practices

Let’s walk through each one and help you decide if an LLC is right for your short-term rental business.

1. Rental Agreement: Your First Layer of Protection

When guests book through Airbnb or Vrbo, your agreement is with the platform, not the guest. That leaves hosts exposed. VRBO does allow you to upload your house rules, so that does create a bit more protection. 

✅ My recommendation? Use a separate rental agreement, signed outside the platform.
This gives you direct terms with your guest and another layer of protection if something goes wrong.

2. Insurance: Not All Policies Are Created Equal

Standard homeowners insurance does not cover short-term rental activity. Here’s what you really need:

a. STR-Specific Home Insurance

Look for policies that explicitly cover commercial activity like short-term rentals. Most basic homeowners policies exclude this.  Proper Insurance is often cited as the gold-standard for STR coverage; key here is business coverage and many cover premises, loss of income, bedbugs etc. 

b. Umbrella Liability Insurance

This covers your broader asset base in case of a major lawsuit. Minimum $1M, ideally $2M+ in coverage.

c. Third-Party Damage Insurance

For everyday mishaps—broken furniture, stained linens, or pet damage—damage protection helps manage minor costs.

💡 I use and recommend Waivo for third-party damage protection. They offer coverage that includes malicious activity, like pet damage when pets aren’t allowed. You can read more HERE

3. Legal Structure: When an LLC Makes Sense

Here’s the truth: An LLC is only helpful if you run your business like a business.

Many investors buy in their personal name and later deed it to an LLC, but that comes with risks due to mortgage “due on sale” clauses. Always consult legal counsel before transferring.

✅ Best Practice: Buy in an LLC from the start—or only transfer if you understand and accept the risk.

An LLC creates separation between your personal and business assets. But that protection only works if you’re following through with…

4. Business Practices: Piercing the Corporate Veil Is Real

If you mix personal and business funds, you’re not running a real business—and courts can ignore the LLC structure entirely.

✅ Keep a separate bank account
✅ Pay expenses from the business
✅ Take owner draws and make capital contributions properly
✅ Keep records clean and audit-ready

💡 Your LLC only protects you if you behave like a business owner.

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Just Getting Started?

The advice I give folks is lean into learning. Podcasts, books, online content - get clarity about your goal and the path you believe suits you. Check out my Mentors From Afar for ideas of folks and resources I've leveraged in my own journey and grab my 30 page guide - and bonus analyzer spreadsheet to walk you through this process for only $5!!

🏡 Ready to start building your STR success story?

Watch the video, grab your roadmap, and take your first step toward owning a profitable short-term rental business — even if you're starting from scratch.

▶️ Watch the Video | 📚 Get the STR Roadmap | 📞 Book a Free Call

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My business The CEO Host is all about helping STR owners and manger run their business like a Boss; whether its Just Getting Started or Optimizing your Results, I'm here for it. I specialize in 1:1 personal consulting - be it a package or one hour together. If you are looking for some help to achieve this, lets CHAT and see how I can support you - be it getting more clarity, more organized and efficient, or just starting. My corporate experience, education, and logical, strategic approach to business has been a boon to short-term rental owners, operators, investors. I'm here to help those seeking to be in achieving goals faster with more confidence.

If you'd like to receive updates from The CEO Host, join our email list. No spam, just the occasional update to help your Short-term Rental business! Sign Up HERE

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Hey Boss! I'm Kate, owner/founder of The CEO Host. If you are interested in taking a leap into short-term rentals - or have some questions about your existing business, my goal - passion, and career, is to help YOU succeed. I've coached hundreds of folks getting started or looking to optimize, analyzed more deals (and duds) than I could count, completed thousands of hours of education and training, attended conferences... So don't be shy. A good CEO knows to bring in expert help - and that's what I'm here for! Lets HOP ON A CALL and chat!

PLUS—get my Income Potential Calculator (Excel tool) to estimate your STR revenue and map out ROI scenarios.

Categories: : Scaling & Business Optimization