Should We Create An LLC For Our Real Estate Investments

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This is a question that comes up a lot – even though it’s probably not the most important question. Your investment strategy is more impactful than a choice of a business entity. But how important is it for you to create an LLC for your real estate investments?

Nevertheless, an LLC can be a useful tool for some types of real estate investors and certain investments.

🔶 Should We Create An LLC For Our Real Estate Investments 🔶

What are the advantages when you create an LLC for your investments?

  1. A properly created and managed LLC can shield your other assets from liability and debts.
  2. It separates your personal and business affairs.
  3. It allows you to take on some debt that is either not personally guaranteed or not on your personal credit report.
  4. It facilitates simple and complex business arrangements.

What are some disadvantages when you create an LLC for your investments?

  1. Some lenders will not allow it.
  2. You are mostly limited to commercial loan products, which have higher fees and rates.
  3. There are costs to the state.
  4. You must manage it appropriately to keep the benefits.
  5. You are still liable for any personally guaranteed debts.
  6. There is some up-front work.
  7. What are some alternatives?

Corporations and S-Corporations for active income.

  1. Umbrella insurance and other insurance products.
  2. Partnership Agreements.
  3. A management entity instead of a title-holding entity.

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