This article from BiggerPockets discusses the importance of forming an LLC when renovating your short-term rental property. It explains how an LLC can protect your personal assets from liability claims arising from renovation work, such as contractor injuries or property damage. Hosts should consider forming an LLC to mitigate risk and protect their personal finances, especially when managing renovations themselves.
When a contractor orders renovation materials, the supplier has a lien on part of your home equal to the cost of the materials. If a contractor, for whatever reason, ends up not paying the supplier, the supplier can sue you for the cost, or, in the worst-case scenario, force the sale of the property to cover their costs.