It’s very common for those starting out in real estate investment to realize the benefits of creating a limited liability company (LLC) after they have started the investment process. Creating an LLC for a real estate investment has obvious benefits: It means that you will be personally protected from being liable in the event of you making a loss on your investment.
While the benefits of creating an LLC tend to be a great source of protection, it’s all too common for investors to take action too late. If you have already secured financing for your investment, or even closed on the real estate that you have invested in, things can become more complicated.
When is the best time to set up an LLC?
The best time to set up an LLC is before you have secured financing and before you have purchased the property. This is because the mortgage that you take out against the real estate investment will need to be in the name of the LLC, not you. Additionally, the property will be owned by the LLC.
Can I still protect my existing assets by setting up an LLC later?
It is possible to set up an LLC after you have closed on your investment. However, you will need to speak to your lender about transferring the title of the loan. This may have financial implications, so it is important to be aware of these.
If you want to protect existing assets within an LLC, it is important that you learn about the necessary steps to make this happen efficiently.