Many real estate investors choose to form an LLC to protect their investments from potential lawsuits or damage.
Do you want to protect your real estate investments? Then an LLC might be the right choice for you. LLC owned real estate can provide additional legal protection against potential lawsuits or damages. This article explains what an LLC is and why it is beneficial for people investing in real estate.
What is a GmbH?
LLC stands for limited liability company. This type of company protects its owner from personal responsibility for the debts and obligations of the company itself. In other words, if an LLC incurs any debt or obligation, the LLC may be held liable, but not necessarily you as the person running that business owns.
Using an LLC for Real Estate Investing
In some states, you may be required by law to use an LLC for your business if it is involved in a trade in goods and services. Other states don’t require an LLC for this type of transaction, but it can be a good idea to use one anyway.
Many real estate investors choose to form an LLC to protect their investments from potential lawsuits or damage. When a landlord has an LLC, any lawsuit or damage suffered by the property is generally limited to that LLC. The LLC protects both the owner (or owners) and investors in a transaction. This is because if it were sued for damage or debt incurred by any of its properties, only that property would be required to pay that debt and not you, the natural person, who owns that business.
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For example, if a tenant is injured in one of the units unless they can prove the landlord was negligent or in breach of local building codes, then any lawsuit is limited to suing the LLC. This protects an investor’s assets from potential litigation.
What does it cost to found a GmbH?
It all depends on where you live and what type of company you need (limited company). The average is around $ 200 to $ 300 for registration fees in most states. You will also have to pay an annual renewal fee.
How long does it take to found a GmbH?
Most states allow you to register an LLC online, so it should take less than 15 minutes. The state will provide your company with a form and then ask the relevant questions about the name and activity of the company, where it will operate, etc.
You may also need to include the names of any members or managers (those in control) in your LLC and any other group or person who has a financial interest in the company.
What if I have already bought the property in my own name?
In most cases, you will need to transfer ownership of your deeds and titles. Since you own both the LLC and the real estate, you must transfer ownership from you as an individual (or company) to your LLC. There are many professionals who specialize in this type of transaction and who can provide assistance if necessary for a fee.