Looking for best legal structure for real estate investing

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Looking for best legal structure for real estate investing

Andrew Richardson
Investor · King Of Prussia, PA · Member since 2015 · 1 post · 0 votes

Hello,

I am trying to find out/verify the best legal structure for real estate investing. From my research and listening to BP podcasts it appears that a series LLC with a operating company and holding company/s seems to offer the best asset protection and flexibility. Adding each additional property in a separate cell within the series. Would you agree?

Most importantly I am looking for additional asset protection (outside of insurance) and tax savings while growing my portfolio. Would like to maximize potential of the operating company as a business while being a pass through to the holding company/LLC's. Any issues/concerns with this thought?

Unless this direction is seriously flawed, I am looking for someone to help facilitate this setup or alternatives. I've looked into creating the LLC's but figure I need to get the operating agreements between the cells rock solid so that it will be very difficult to pierce the corporate veil. I haven't been able to find a good resource to assist with this process.

Any advice/tips/direction is greatly appreciated.

Many thanks in advance!

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  • Rob Beland
    Investor · Leominster, MA · Member since 2011 · 1k+ posts · 589 votes
    11y

    You might consider searching the forums here for posts about LLCs. Your post leads me to believe some guru has told you all about LLCs and corporate veils. What is your current net worth? How much equity do you have right now in any real estate you own? How much equity do you expect to have in the next five years? Are you really that concerned about somebody piercing your corporate veil? I think you should look into general liability insurance (after you actually buy your first property). Price out $5M in liability insurance and compare that to however much you will be charged to set up and maintain that web of corporate confusion. You are really overthinking this imo. Also consider why landlords get sued. They are sued because of negligence. If you are found to be negligent in court there is no asset protection. The plantiff's lawyer will have access to every asset you own. 

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  • Adrienne G.
    Specialist · Clermont, FL · Member since 2015 · 91 posts · 35 votes
    11y

    I'm not an attorney or legal professional so take this with a grain of salt. I was told by an attorney friend that putting everything in a living trust gives you better protection. So if you have an LLC or corporation, then place that LLC or corporation into a living trust, it offers better long term protection. Ric Edelman talks a lot about this kind of protection. I am not a client nor affiliate of his but I have listened to his podcasts and read a few of his books. Here is his website link: http://www.edelmanfinancial.com Also check out any variety of financial websites that talk about asset protection and financial planning.

    The living trust coupled with the insurance that @Rob Beland spoke of should help. But it isn't really a matter of LLC vs corp. Talk with your attorney and tax advisor before taking any steps. Hope this helps.

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