LLC

LLC

Should I establish an LLC to buy property?

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M. Todd VanBuskirk


Protection and Credibility

This is my opinion: I have another LLC for a small business I run with a partner. I did that because I had a lot more financial skin in the game than my partner did, and I have a lot more that can be lost if someone sues off during the course of business. It cost about 2k total for me to set it up because NY requires you to run expensive ads in two papers establishing your incorporation. BUT, the 2 grand was worth knowing that I wouldn't lose my retirement account or have anyone leach off of my higher monthly income.

LLC's offer protection more than anything. If done right it separates you (an entity) from your business (an entity), both of which can be sued, establish or ruin credit, and operate independently. I'm working on closing a deal right now that is a rental property and haven't started an LLC for REI yet, BUT I will file one soon after and eventually transfer the title to the company. Especially since I want many properties in a portfolio. Right now with one, though, the risk is still low.

I only point out that they have expenses because if you're not quite generating cash yet, you could go $1500 in the hole real quick to set it up, depending on what state and what their required advertisement bylaws are. $1500 is enough to lock up a contract somewhere and get started on actually making money.

So in short I guess it depends on what your current financial status is and how much you and your estate have to loose if something goes wrong on a deal. I ALWAYS, always recommend talking to a Real Estate lawyer, or estate lawyer. Initial consults are almost always free, and if they're not, you probably don't want to work with that lawyer.

Take care,
Chad.

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It's possible.
Writing on http://thisbluecouch.com


Thanks, Todd

Thanks,

Todd

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M. Todd VanBuskirk


you don' t need it

Todd,

you don't need it to start investing, but once you start building your inventory of rental properties I would definitely consider applying for a series LLC to protect yourself and the rest of your properties if one tenant decides to sue you; with the LLC they could only sue for that specific property.

There's a great thread on LLC's on this site; just enter LLC in the 'search' box on the top left of this page, and hit enter.

LLC = protection

wishing you success,

Valerie

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Valerie

“And will you succeed? Yes indeed, yes indeed! Ninety-eight and three-quarters percent guaranteed!” ― Dr. Seuss

"I believe in angels, the kind that heaven sends; I am surrounded by angels, but I call them friends" - Unknown

My journal: http://www.deangraziosi.com/real-estate-forums/investing-journals/59110/...


LLC

great advice


Todd,

I agree with both Chad and Val. If you are just getting started I wouldn't worry about an LLC right at your start up. Like Chad said, here in NY state it is expensive to start up an LLC and yes there are also other fees that go with it like accounting fees. Since you are starting an LLC you now become transparent to the taxing authorities in your state and guess what you now have a tax bill to contend with and also the feess that go with it. Not to rant on, but my advise and it is only advise would be to get your feet wet, get some cash in the bank and then talk with your attorney and accountant about a formation. Much success...Jan


Thanks for the info

Thanks for the info

__________________

M. Todd VanBuskirk


LLC

I agree with Chad. I think it is a must. It also shelters your $$$.

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" Not Having a goal is more feared than not reaching one"

Christa Niven


Good Info...Thanks! Ron and

Good Info...Thanks!

Ron and Ingrid

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"I'm discovering the best way to predict our future is to create it!"


hard money

What is hard money?

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M. Todd VanBuskirk


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