If you’re a real estate investor here in San Diego, how much do you know about Limited Liability Companies and corporations? For those who own or will be buying investment properties (e.g. residential or commercial rental properties), you may want to create a California Liability Company (LLC) or corporation. These business structures can be used to hold ownership of your real estate, instead of having title to the property in your own name.
What happens if you keep property titled under your personal name?
If you’re sued and lose the case, then your personal bank accounts and other assets can be used to pay off a judgment. But if you create an LLC or corporation, then typically only the property in the name of the company will be subject to these debts.
To further limit potential liability, you should consider placing each investment property you own in a different company. That way, a lawsuit against one company doesn’t affect other companies holding additional real estate.
We’ll advise you on the best practices you should employ to you maintain the protections and benefits of California LLCs and corporations, and explain the tax implications and other important considerations.
Real estate owners should keep in mind that lawsuits can come about for many different reasons, such as:
● Accidents and injuries on the property
● Legal disputes with tenants
● Creditor disputes
Some of these claims could be partially covered by any insurance coverage you may have, but all too often the liability exceeds the coverage. That’s why many people buy investment or rental properties through an LLC or corporation (or transfer title to one of these companies if the real estate is already owned under the investor’s personal name).
How else can you maximize the success of your real estate investments?
On the business end, investor and blogger John Fedro shares his advice in “5 Ways To Streamline Your Real Estate Investing Business Machine,” including:
● At the top of Fedro’s list is a recommendation that you specialize in one real estate niche, because if you take on too much there’s more of a chance that you’ll fail.
● You’re also forewarned that even though not everything about your real estate ventures is exciting, you can’t ignore your responsibilities. To that end, he suggests you make sure you complete at least one real estate task every day.
● Also do your “due diligence.” In other words, before buying, thoroughly inspect every property so that you don’t end up in a financial and legal disaster later. (This means inspecting the physical condition of the property, and looking for potential legal problems with the property.)
Before you buy real estate, contact your real estate attorney at San Diego Law Firm to evaluate the many legal issues involved in your real estate transaction.
Don’t wait too long, because an LLC or corporation won’t protect you from claims created while the real estate was owned under your personal name. Find out whether an LLC or corporation is a good option for ownership of your investment properties by contacting San Diego Law Firm’s skilled real estate attorneys at (619) 794-0243.
