Why do you have an LLC?

5 Replies

Because it limits liability. If something happens and you get sued, they cannot take your personal home, just what is in the LLC

A business can get loans, they just need the same time frames as a person. So been active and have numbers for two years for the most part. We bought our first property with cash but refinanced through the LLC.

Everyone should create and use an LLC for real estate. They are super cheap to make and offer protections that can save you from losing your kids college fund or your own personal home.

For the people who enjoy the numbers... An attorney can create a basic LLC for $500. If you have an average lifestyle with a $100K home, $50k in 401k, $15k in child education fund, and $10k in the bank then that LLC can protect all those assets from being taken as part of a settlement. That means your investment of $500 into an LLC has a cost avoidance ROI of 34,900%.

@Charlie Moore I have 2 LLCs currently. I started the first one for my side hustle engineering consulting after my CPA said it was time to start separating revenue and liability as projects got more complex.

I opened my second one just recently specifically for real estate investing that I can either deed the property into OR community banks like to see a business on the mortgage of a cash out refinance in their portfolio loans.

My first investment property was actually bought using an unsecured business loan to my engineering LLC based off the income it generated over the past few years. I used those funds to be a "cash buyer" to purchase the property in my own name. This was huge since there wasn't a mortgage and I didn't have to season anything before going to my local bank and do a 70% LTV cash-out refinance into my real estate LLC once the rehab is complete.

There are many reasons LLCs are beneficial, liability protection is only one.