Pros and cons of putting a property in a LLC - Investor Alert
One of the most common questions from real estate investors is about the use of a limited liability company (LLC) to hold the title of real estate investments.
Today's issue of The Washington Post, in the Real Estate Matters column by Ilyce Glink and Samuel J. Tamkin offers a very good response to this question.
"The purpose of a limited liability company (LLC) is to protect the assets of the owners of the real estate from potential liabilities arising from that property. That is the main benefit of an LLC. An LLC also allows you to hold yourself out to the world as an owner of a property that is held by a company. It makes some owners of investment properties feel better to say they are the manager of an LLC or the owner of an LLC when dealing with their tenants." - The Washington Post
Real estate investors and their exclusive buyer agents should take a few minutes to read this article. The difficulty of obtaining mortgage financing for properties in a LLC and the administrative costs are prohibitive for many.
The experience that we share with real estate investors is that most do not use limited liability corporations when real estate financing is needed. We recommend additional insurance coverage to provide protection from any anticipated liability claims. An adequate umbrella liability policy could provide the needed protection at a much lower cost that would be required for an LLC.
What do you recommend to real estate investors when asked about the use of limited liability corporations?
Every real estate professional needs to be able to address this issue.
Be sure to have your camera in hand to capture the special moments and the colors of the changing seasons.
Longwood Gardens Orchid House IMG_2350
Photograph by Roy Kelley. Canon PowerShot G11 camera.
Roy and Dolores Kelley Photographs