A Limited Liability Corporation, or LLC, can be an advantage for your real estate investing, but if you don’t use or prepare it correctly, it can just as easily be false hope if things start going south on you. Property investment is appealing because it can generate very profitable returns when you consider what other investment activity might produce and a real estate LLC is key to how a lucrative real estate investor’s fiscal picture is created. The LLC acts as an entity which serves as the actual owner of the property you invest in. This isn’t just a legal fiction; the LLC truly is the buyer and seller of real estate. The advantage of this is to shield the investors behind the LLC from any additional penalties or costs should anything happen which exposes the owner of property to liability. Each state has its own regulations for the LLC process, so be sure you know them for your area of activity. Select a name, and file the necessary documentation with your state’s officials. Prepare the agreement which governs how your real estate LLC will operate. Then, after you obtain all the required permits and licenses, at both the state and federal levels, your LLC is ready to open for business.

Key Points:

  • 1An LLC will protect you from personal liability should there be a lawsuit.
  • 2An LLC also protects your investor’s assets and gives them additional benefits at tax time.
  • 3Costs to set up an LLC vary by state, expect to pay between $50 and $500.

While the ability to generate sales and build your business is crucial to success, it is equally (if not more) important to keep it protected at all cost.