Setting Up a LLC for Real Estate
An LLC for real estate is a legal entity that provides investors the opportunity to purchase and own real estate in a way that protects them from personal liability.
The investor can buy and sell real estate while conducting other business in the name of LLC rather than as an individual.
Property owners are allowed to establish individual LLCs for each separate property which can help avoid cross-liability between multiple properties.
LLCs are becoming increasingly popular due to the benefits they offer real estate investors.
Here are the steps to creating a real estate LLC:
- Know the state regulations on forming an LLC.
- Choose a business name and ensure it doesn’t already exist.
- File an “Article of Organization,” found on your Secretary of State website.
- Create an Operating Agreement for your LLC.
- Publish an intent to file if your state requires it.
- Obtain the necessary business licenses and permits.
If an investor owns a property, and if a lawsuit were raised against their property, they would be named in the lawsuit, leaving their personal assets vulnerable in any legal proceedings involving the case. One of the biggest benefits that LLCs provide to investors is the limit to these vulnerabilities. With an LLC for real estate, investors can reduce liabilities and instead of having to also defend their personal assets, any liabilities would fall on the LLC so their personal assets are untouched.
The cost of forming a real estate LLC is dependent upon the state you are filing. There are individual state filing fees and other fees may apply. It is recommended that your real estate LLC is formed before you purchase your first property because this will help ensure you have all of your LLC-related protections and benefits in place before conducting business. If the property has already been purchased, you can still transfer property under a business name.
Forming a real estate LLC is an extremely important step for any investor to take. Your personal and business assets are protected and you reap the tax benefits that you rightfully deserve. Understanding the process is essential, but starting is the very first step to take. If you don’t know where or how to begin, give us a call or text today. Attorney Darcel Lobo can guide you through the entire process. You can reach us at (206) 408-8158 or [email protected].
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Normandy Park, WA 98148
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