Real Estate LLC

LPs used to be one of the most common ways companies would raise money from investors, but the advent of the LLC entity structure has put Limited Partnerships on the backburner. There are some strong similarities between the two structures, but a few distinct and important differences show why more investors opt for LLCs today.

Your biggest risk in moving a piece of financed real estate into an LLC is you are creating a change of ownership. Even if you are going to fully operate the LLC, the LLC becomes the legal owner of the property.

Real estate is a thriving industry right now, with people turning dreams into reality as property values skyrocket and the market continues to move throughout Florida. The thriving market has some less experienced individuals getting involved and building up impressive portfolios relatively quickly. With inexperience, however, comes greater risk when investors don’t consider the best ways to structure their real estate business.

Putting your name on an investment can feel fulfilling and secure, but ultimately, holding multiple properties in your own name can actually expose you to numerous risks in the future. We want to explore those risks so you can avoid them before it’s too late.

As an owner (member) of a limited liability company (LLC), there are still plenty of external factors affecting your company that you can’t control. For members who have a minority stake in the business, this feeling might be even more amplified. Thankfully for minority members of LLCs, the Florida Revised LLC Act provides a number of statutory protections.

Many real estate and legal professionals advise real estate investors to form an LLC for every single property you plan to own. The logic here is that a judgment against one property only affects the assets of that one property instead of impacting other properties owned by the same LLC. As we’ll explain in this blog, though, the situation isn’t always this straightforward. 

Many business-minded Floridians find that investing in real estate is one of the most effective (and tax-efficient) ways to make money from a stable source of passive income. With minimal effort, real estate owners can set up entities that also allow them to enjoy limited personal financial liability in case investments go south.