Over the next few weeks, we're going to answer some common questions asked by everyday real estate investors. In this first video, we address the #1 question we get, "Should I set up an LLC for my real estate properties?" Watch below for our answer!
The biggest question that we get from people thinking about or have already invested in real estate is, should I put my properties into an LLC or some kind of other business entity?
The answer to that is really, it depends. It depends a lot on how you finance the property. So number one, think about, have you used mortgages in your personal name to buy these properties? Number two, have you used commercial financing to buy the properties? You're going to want to get an opinion of somebody like an attorney or banker to see if, in fact, based on your financing, if you can move the properties into some type of business entity or not.
Next, you really want to think about what's your long-term plan with these properties. Are you going to be holding them, are you flipping them? What is the real nature of the risk? It's very important to look at each one on an individual basis and really figure out, "God forbid, if something terrible happened, how much exposure do I really face?" Because the exposure between buying and holding a property for a short period of time and flipping it versus holding for the long-term and stocking that property with tenants, that's a very different type of risk.
So the best thing is to get a professional opinion as to whether you can put them in an LLC, and then, how to overall structure your portfolio of holdings. Do you need multiple LLCs? Will just one suffice?
Stay tuned for some additional helpful videos for real estate investors on our channel.
You can always set up a time to talk with our office about how we can help structure your real estate properties.
Sarah E. Holmes is a Philadelphia business attorney and strategist that helps start ups and established businesses looking to expand, protect their assets and increase their profits in an approachable, down-to-earth way. When you're looking for a business lawyer near you, we offer several convenient locations.