4 Reasons Why You Should Use an LLC For Your Real Estate Investment Properties

Using an LLC to hold real estate can be a great strategy.  Read on as the real estate lawyers at WZ Law Group explain more on this below to help you evaluate whether this is the right choice for you. 

What Is An LLC?

The term “LLC” stands for “limited liability company.” A limited liability company is a separate legal entity that typically has more flexibility and is less costly to maintain than a corporation.

LLCs in North Carolina must be established with the North Carolina Secretary of State.

4 Reasons Why You Should Use An LLC For Your Real Estate Investment Properties

Reason 01:  Limit Your Liability

Holding a valuable real estate asset in an LLC rather than in your personal name can protect and insulate you and your other personal assets from liabilities that may arise with the property.  

Reason 2: Use Real Estate Expenses as an Offset

Owning real estate in an LLC can allow you to take advantage of the expenses you incur in operating and maintaining that real estate against any income on that real estate.

Reason 3: Segregating Business and Personal Business

An LLC is a “flow through” entity meaning the income from the LLC (or the real estate asset owned by the LLC) will flow through the entity up to the person or persons who own the LLC.  While this may seem as if the LLC blends into the person owning it, there can be real advantages to segregating business assets such as investment properties from personal ones such as your primary residence from one another.

Reason 4:  Establishing Strong Fences with an Investment Partner

If you plan to co-invest with a partner in an investment property, buying the property in an LLC can make all the difference in how investment partners operate the property.  An LLC can and should have a solid Operating Agreement which governs the rules of the road for owners of the LLC.  Establishing these “strong fences” between the co-investors can help ensure all parties understand up front how expenses will be covered, who will be responsible for which roles and how the property will be sold and proceeds shared.  

Speak With A Business Lawyer Today

Forming an LLC for your real estate investments can be very beneficial. Speak with a business lawyer at WZ Law Group today to learn if this is right for you.