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LLC Real Estate Purchase

Asked by: John - 20 March, 2011
https://d25eic0jctudgb.cloudfront.net/images/site/avatars/default.png-f1597c1da25f30f8c1a941405e8391c8 Are there any downfalls to purchasing realestate as an LLC? What are the bennefits?
Answered by: Lloyd Johnson - 20 March, 2011
https://d25eic0jctudgb.cloudfront.net/images/site/avatars/36.jpg-879792e1197755ef7c796380de659758 Dear John,

This is the kind of topic where it is smart to consult both your accountant and a real estate lawyer before making a final decision. From our experience, there is no reason to buy real estate for personal use (such as your primary home or your vacation home) under an LLC. In fact, there will be some disadvantages to doing so, both in tougher financing conditions and in certain tax implications.

Buying investment properties under an LLC, however, is a very good idea and is done a lot. In fact, the trend is to buy each new property under a separate LLC. This ensures not only that you are personally protected from any liability incurred by your particular real estate investment, but also that if one of the properties were to fail and incur a debt, this debt would not influence your other investments. 
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In some states, rather than forming a separate LLC for each investment property there is a simpler option called Series LLC. As you can read in our article on the subject, this is a single companies with subsidiaries, each of which has limited liability in its own right.

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