What are the other advantages of using an LLC to invest in real estate?
First, an LLC by definition limits the liability to the assets of the LLC. If your LLC is sued as the owner of a building, recovery is, in most cases, limited to the assets in the LLC (exceptions to this limitation may vary from state to state, so check with your local real estate lawyer; in California, for example, exceptions include if an LLC member actively participates in a tort, signs contracts in his individual name or conducts the LLC in such a way such that a creditor may pierce the company veil). Plaintiffs can’t reach through the LLC to the underlying members (shareholders), including your IRA or you as the owner of the IRA. Thus, LLC’s are commonly used for asset protection. Secondly, if you have a large group of investors, LLC’s simplify the purchase and management of real estate property by reducing the number of parties in the execution process. For example, an LLC with ten members can appoint a managing member, and that member can sign on real estate contracts and all ot
First, an LLC by definition limits the liability to the assets of the LLC. If your LLC is sued as the owner of a building, recovery is, in most cases, limited to the assets in the LLC (exceptions to this limitation may vary from state to state, so check with your local real estate lawyer; in California, for example, exceptions include if an LLC member actively participates in a tort, signs contracts in his individual name or conducts the LLC in such a way such that a creditor may pierce the company veil). Plaintiffs cant reach through the LLC to the underlying members (shareholders), including your IRA or you as the owner of the IRA. Thus, LLCs are commonly used for asset protection. Secondly, if you have a large group of investors, LLCs simplify the purchase and management of real estate property by reducing the number of parties in the execution process. For example, an LLC with ten members can appoint a managing member, and that member can sign on real estate contracts and all other
