The benefits of investing in real estate as an LLC
You do not have to register a separate business entity to invest in rental property. There are, however, some compelling reasons to do so, particularly as an LLC since one can be started by just a single individual owner. There are five main advantages:
- Limited personal liability and protection for personal assets: Any legal actions involving your real estate business will be filed against your LLC, not against you, which helps to shield your personal assets from seizure.
- Structure for your business: Registering an LLC for your real estate investments helps keep the focus on running a business that generates revenue and profit. When you take the time to regularly review your business goals or update your Business Plan , you can also plan how to grow or increase your revenues or profits.
- Tax benefits: Whether you want to utilize pass-through taxation or corporate tax status, you and your Tax Pro can determine which filing approach is most beneficial for both you and your LLC.
- Business partners or other investors: Your LLC Operating Agreement may include rules for making business decisions, distribution of profit and loss, and other key details that prospective new partners appreciate.
- Estate planning: Consolidating your real estate investment under an LLC may help minimize estate taxes and ensure your real estate business remains viable after you pass away.
Go from property owner to real estate business owner
Without an LLC, even with insurance, a property owner can still be personally on the hook if a legal claim exceeds the policy coverage, or isn’t covered. For commercial property owners, or those with multiple properties, or multi-unit properties, there are even more risks. Risks, however, are part of business, and so is managing those risks. An LLC, when registered and run properly, can limit the liability of the LLC’s owners.
Ways Rocket Lawyer can help:
- Register your LLC.
Starting an LLC is easier than you realize, especially with the help of Rocket Lawyer. And with a Rocket Legal+ membership, your first LLC registration filing is FREE (excluding state fees).
- Get a registered agent.
When registering an LLC, states typically require a registered agent to be named. This is someone who can be available during normal business hours to receive official and legal mail. Rocket Legal+ members save HALF OFF registered agent services.
- Talk to a Legal Pro.
Running a business, especially when managing rental properties, comes with a lot of questions that are best answered by a Legal Pro. Reaching out to a Rocket Legal Pro™ is an easy and reliable way to get affordable legal advice.
- Everything legal all in one place.
From Lease Agreements and Eviction Notices to maintenance contracts, hiring documents, or even a Profit and Loss Statement, Rocket Lawyer helps landlords and real estate investors manage their properties and businesses. And when you have questions, or need help with taxes, annual reports, contract reviews, or trademark registration, Rocket Lawyer has you covered with everything legal, all in one place.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.
