There are various ways for buying a real estate investment property. You can buy it under your name. If you want anonymity and protection from liability, you can buy under a real estate trust or a limited liability company (LLC).
Before you pick a property purchasing option, you should consider the type of property you want to buy, the number of tenants you will have, and your future investments.
Purchasing Under Your Name
Buying an investment property under your name will save you the extra costs of hiring an attorney. Liability insurance is also less expensive when you buy it under your name. The insurance you pay for a property under a real estate trust or an LLC could be twice the price you have to pay for a property under your own name. It would also be easier to get a mortgage with a property under your name, because banks will have something to pursue if you fail to keep up with your mortgage payments.
One of the main disadvantages to having your investment property under your name is having your personal assets vulnerable to lawsuit risks. Make sure you have a good insurance policy to protect your personal properties.
Purchasing Under Real Estate Trust
A real estate trust is a great option if the owner wants to remain anonymous. However, with recorded documents, such as tax declarations, going online, anonymity may be difficult with this one.
If there are more than one owner of the investment property, it would also be best to put the property under real estate trust. This will also help owners avoid death trust and also make it easier for them to transfer ownership to their heirs.
One of the major disadvantages to this, however, is the expensive legal fees you have to pay in case of modifications made by the partners, or changes in the estate planning.
Buying Under LLC
LLC is more favourable among investment property buyers, because it gives them ample amount of protection and security.
If the owner of the LLC is subjected to lawsuit, only the properties under the LLC will be at risk.
This also provides a good deal of anonymity to the owner.
LLC will also give the owner an extra layer of protection if ever the owner chooses to use the investment property as a commercial space. The extra layer of protection is needed for a space with more people coming in and out.
To make sure you buy an investment property using the right way appropriate for your needs, it is always best to consult or hire a lawyer.
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