Why buy investment property under an LLC

An LLC or a limited liability company will benefit you in many ways if you decide to buy real estate properties. That’s because it will provide plenty of protection in the long run. Its purpose is basically to protect you from the potential legal liabilities that your properties will have to endure in the future. LLCs prevent any unfortunate event, take away all that you have worked hard for.

Here are its advantages:

Because it will be your responsibility if an accident happens on your property, what an LLC does is to protect your personal assets such as bank accounts, stocks, vehicles, retirement funds, and other real estate properties from the litigation.

LLC does allow a profit distribution that is flexible among its members.
It will provide a temporary protection if a plaintiff attorney will conduct an asset search on the members for a lawsuit.
Tax wise, an LLC will classify your property as a pass through company. This means you’d be avoiding double taxation.
It allows an easy transfer of real estate percentages to whoever you wish to award it, e.g. to your children, wife, parents, friend, etc.

Here are its disadvantages:

It is expensive.
It’s time consuming.
It involves a lot of paperwork.
Some lenders will not grant loan on LLC companies.
It’s not ideal for everybody who has investment property.
Not all states recognize LLC.

If you’re not sure how LLC can truly benefit you, consult your state attorney right away.