Use This Simple Entity to Eliminate Fear On RE Deals
When dealing in the area of real estate investing, you are interacting with many different parties. Depending on your field of expertise, you may be working with other investors, rehabbers, contractors, tenants, partners, lenders, property management companies and on and on. Common sense tells you that the more parties with which you are involved, the greater changes for things to go awry. Common sense should also tell you that you should take every precautionary measure available to you. One of those prevention areas involves your business entity.
If you’ve been conducting your Real Estate Investing business by buying and selling in your own name, you’re leaving yourself wide open for lawsuits (both frivolous and serious). Not a smart move in this extremely litigious society.
Keep in mind that any business entity – whether a corporation, a limited partnership or a Limited Liability Company – is set in place to reduce the liability of any one person. It’s foolish to put your own name, your own personal property, and you family assets at risk in order to run your real estate investing business.
A simple step to take to protect you and your investments is to set up a LLC (Limited Liability Company). An LLC is essentially, a mix between a corporation and a limited partnership. All partners (or "members") have limited liability and all members can participate in the management of the LLC without suffering any liability.
Because all the members are shielded from liability, consider using an LLC as your entity for holding investment real estate. The members are protected from tenant lawsuits and the equity of the members is protected from other creditors.
Setting up your LLC will also have a wide variety of tax advantages. Contact a real estate attorney or a trusted accountant to walk you through the necessary steps. This is not an area where you should cut corners. Your future business success could depend on it.
So when it’s raining you can either stand out in the rain and get wet, or you can put up an umbrella and be protected. It’s your decision.
Same with your investing business. Do you want to get soaked? Or do you want a measure of protection? If the latter, then check into the details of setting up an LLC and do it today.
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