Hey BP I was wondering if it was smart to form an LLC before attempting your first deal to give you legal protection?
Any advice is greatly appreciated!
Hey Spencer! As far as investing in your first deal, many of the previous BP podcast episodes say that this depends on your specific situation. If you plan on getting something with 4 units or less, you may not need it. In the end, it comes down to whatever advice you decide to take from your lawyer. However, an LLC is definitely not an absolute requirement to get into real estate. Happy investing!
@Spencer William Quesenberry , I agree with Trevor that more information is needed, but generally if you have more assets than your first deal, the LLC will help to protect what you currently have from any legal issues arising in your first deal. As you build personal assets, the following graphic shows steps you can take to protect those assets. When you buy your first investment in your name, then everything in your name is subject to any judgements that arise - and they are all in your name.
I am 100% certain that you should have an entity of some sort. There are corporations (C and S), and LLCs, and they all have their own pros and cons. When looking at an entity, you need to look at asset protection as well as the tax advantages or each.
Check out Tax-Free Wealth by Tom Weelwright.