A few questions on LLC's on Real Estate?

Question

How well of liability protection does it provide for real estate?
How much more of tax advantages does it offer?
Can other things be written off through it?
How many properties should I have under one LLC?
How much does it cost to start an LLC in California?

Answer 1

Be careful, LLC's do limit liability on most businesses but Real Estate still carries alot of personal responsibility.

Answer 2

My company ( I work for a Private Money commercial mortgage Lender) when we foreclose on commercial mortgages we always take them back in the name of an LLC. We do this because since our loans are private (meaning investors fund the loans) when a property is taken back it is owned by all the investors. The LLC protects the whole group, if there was some kind of contamination or other liabilities. There are no tax advantages that I am aware of. But it protects the investors if someone was to sue us for something.

Not sure about write offs, you would need to talk to a tax professional.

We have a different LLC for each property.

To start an LLC in California, you will need to create an Articles of Organization and Operating Agreement. if you haven't done this before, you will most likely need an attorney to draft it, which could cost you plenty of money.

After you have these two documents you need to file with the Secretary of state. The LLC document filing is approx $90.

Answer 3

The advantage of an LLC in real estate is this: If you have a contractor on the premises and he causes an injury, injured parties can only collect from you up to the amount of your equity in the property. Your other assets are protected. If you perform services on the building, you could be personally liable up to the total amount of the suit. There is no tax difference between an LLC and a sole proprietership.