Hello every one my names Steven. I'm new to all of this and I'm just trying to see how it works. I have a question, If I get a Trust for my property's do I need an LLC, and what benefits does that give me, or do I need an LLC no matter what? Thank you.
@Steven Taylor It is easy to become overwhelmed with all of the opinions and information available online and being shared through social media. As a real estate investor, you first have to understand the risks most likely to impact you and then ask yourself how and why will this particular LLC arrangement or trust add protection to my real estate and your personal assets. It's also important to understand how real estate conflicts are most frequently resolved. I believe a lot of money is spent unnecessarily pursuing asset protection strategies that are impractical in the lens of real estate related disputes and conflict resolution.
Short answer: Neither. You can directly own property in your name, just like your primary home. You don't need anything fancy for your first rental property.
Expanded answer:
Google "legal structures for direct ownership real estate" and do some reading to learn what each structure offers and the limitations. Think about your future plans. If you are thinking, "I will buy 1 and see how it goes.", then buy it directly in your name. If you are thinking more like "this is the first of 1,000.", then you want to dive into the ownership structures to see what will work best for you.
Great question! I'd first like to point out that i'm no professional. Make sure you're tenant has renter's insurance. Mandatory. Get good landlord insurance. Get a good umbrella policy. If you do decide to go with an entity structure make sure you go through a reputable firm. You must have a bulletproof operating agreement that protects you and suits your goals. If you decide to go the DIY route, you'll get a boilerplate operating agreement. A complete waste of time and money. Good luck.
@Steven Taylor It is easy to become overwhelmed with all of the opinions and information available online and being shared through social media. As a real estate investor, you first have to understand the risks most likely to impact you and then ask yourself how and why will this particular LLC arrangement or trust add protection to my real estate and your personal assets. It's also important to understand how real estate conflicts are most frequently resolved. I believe a lot of money is spent unnecessarily pursuing asset protection strategies that are impractical in the lens of real estate related disputes and conflict resolution.
OP Trust and LLC are two different things and operate separately.
LLC- legal identity and liability containment. Is one step. Insurance is the next. Good contracts, maintenance and operating procedures are your main tools. If you do an LLC your Operating Agreement is just as important as having the LLC to begin with.
Trust- to avoid probate beyond just a will. Have your estate executed or disbursed based on your directions. If you have an LLC the properties should be purchased using the Trust as owner, which should be spelled out in your LLC.
Sit down with your lawyer or financial advisor and explain your future and have them explain the above.
@Steven Taylor This is a great way to break it down and apply to an individuals needs. I too get overwhelmed with all of the information out there. Thanks for sharing.