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I have been learning more about real estate investing lately and hope to get started in it very soon. My first step in doing so will be to buy a house for myself, and get out of my apartment rental.

In my research, I have started to read about liability for real estate investors. Some people have recommended that I start a corporation (specifically LLC) to act as the trustee on my real estate title deeds. Of course, at this point I only intend to purchase and hold one house to start building credit and equity, and maintaining a corporation can cost a few hundred dollars a year.

Would it be worth it to start an LLC at this point to invest in my first home? Or should I save the money until I start to invest in multiple properties? Is LLC even the best corporate structure for real estate?

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I'm not sure that there's a point. In the United States (where I'm assuming you live), a mortgage company cannot come after your other assets to recoup their losses on a mortgage. They can only take the home, and that after a protracted legal process. The main reason for an LLC is to prevent your other assets from being subject to seizure to pay off the LLC's debts, correct?

By forming an LLC I believe you would deprive yourself of the tax deductions and credits (home mortgage interest, first time homebuyer) associated with a first home - I'm not sure of this, though.

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From my understanding, yes, what you mentioned would be the purpose of the LLC. But yeah, I didn't think about the first time buyer credit and mortgage approvals. Some lenders might see that as some attempt to be dishonest or otherwise. Probably something I'll look into more when I buy a 2nd or 3rd property in the future. – NoCatharsis Jan 14 at 3:59

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