Is it necessary to obtain an LLC
is it necessary for an LLC,when it comes to purchasing multiple units?
Most Popular Reply
@Norvell Eugene Reed It is NOT necessary to have an LLC to invest in real estate. There are advantages and disadvantages to having your properties in an LLC.
A major advantage of an LLC is the liability protection so if you are sued by a tenant or contractor then they can only go after the assets in the LLC when set up correctly. One of the primary disadvantages is lending will based on commercial rates versus residential rates, which are usually higher and have shorter terms.
By owning in your personal name you are able to get the more advantageous lending rates; however, the liability protection is not the same. Many overcome this by having an umbrella policy to protect against any lawsuits.
No matter if you own in your personal name or an LLC, you can still get the write offs. However, ensure you do not comingle business and personal funds. You should open a separate bank account and credit card only to be used for business activities.
Good luck!