Do I need an LLC before I start investing in real estate?
No, you don’t have to have an LLC to invest in real estate. People buy and sell houses all the time that they own in their personal name.
What you need to ask yourself is, what’s your reason for wanting to get the LLC?
If you’re wanting to get it because you’re further along in life, and you’ve got a substantial net worth that you would like to try and shield from your new real estate investing business, and you want to separate that from your personal assets. Absolutely, it’s a great idea to get an LLC or do some work to protect your current assets before your start investing.
Always consult your attorney and see if there’s a better entity and if what you are doing will really help you protect what you want to protect. We’ll just use LLC here to keep things simple.
Now, if you’re like me when I started…I believe that my entire net worth consisted of $8 and a dog…then there may not be a whole lot at risk, so what are your protecting?
Do we work in and hold assests in an entity now? Yes, of course we do.
Another reason you might want to start an actual company is that it does make you look more legitimate.
I mean, if you’re going and buying somebody’s house, you are telling everyone that you pay cash for houses, but all your paperwork says “John Smith”, instead of Sell my San Antonio House LLC, as the buyer, it may not make you look as credible.
If you’re just starting real estate investing here is what I always say, the biggest thing you can do is to take action. So if getting the LLC is what’s preventing you from taking action, absolutely go get it. If “not having an LLC” is really just an excuse, then you need to take a hard look at what is holding you back.
Do you have to have an LLC to start and do your first deals? No, not if that’s not what’s holding you back. Do the right thing, treat people the right way, do your deals the right way, and 99% of the time you’ll be just fine.
Later, you’re probably going to form a company as you move along and become more successful, but it’s not something you absolutely have to have to get started.
Think about this, is not having an LLC actually stopping you from getting started? If it is, absolutely go get it. Do you have certain things that you want to try and shield or you need to separate this new real estate business from another business? It sounds like it makes great sense to do it.
Think about what your real issue is, why you think you might need and LLC? Make sure that whatever you decide you need to form an entity or not, that you take major action so you start moving forward.
I hope this helps in your investing journey. Have a great day!
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