Risk Management For Real Estate Investors
Real estate naturally carries risk, and with risk comes the need for asset protection. While different tools may work best for different investors, the need to have safeguards in place so that your carefully-built business is not taken down by one bit of bad luck like an unexpected lawsuit. The right attorney can determine how best to safeguard your assets.
The Benefits Of LLCs
The first instrument that most risk management attorneys will recommend is a limited liability company (LLC). An LLC acts as a veil of sorts between you and potential liabilities – without one, it is likely that your personal finances will be targeted in the event of a lien or an accident. In general, it is considered good practice to have a separate LLC for each of your properties, particularly if their value is particularly disparate. This approach may also give an extra layer of privacy, just for your own peace of mind.
In addition, LLCs are “pass-through” entities under Florida law, which means that for taxation purposes, the profits “pass through” to the owners, who then pay taxes on all their income, leaving the business to pay none. This can help both business and owner be flexible if anything goes wrong with the business, as well as protecting profits from prying eyes.
Land Trusts
As with any other trust, a land trust is a legal entity to hold an asset – in this case, a piece of property – either in its name or the name of a trustee, for the benefit of another person. While there are many different reasons to utilize a land trust, they can be ideal for the purposes of an investor looking to protect their assets. They are relatively private – it is the name of the trust or trustee that will be public, not the name of the beneficiary – and that privacy extends to the transfer, given that one can transfer an asset into a trust without needing a whole new deed.
If an investor has created an LLC, that LLC can also act as the trustee for any land trusts created, meaning that no public information, in theory, would link back to them. That said, while this combination of instruments is highly regarded, it is important to consult a knowledgeable attorney to ensure that no other, better approach exists for your specific situation, and also to ensure that no small mistakes have been made that could invalidate the documents’ protection.
Call A Tampa Real Estate Investment Attorney
Real estate investment is a field that never stops moving and changing, and it is unfortunately all too common for problems to arise seemingly out of the blue. With the right asset protection tools in place, your business can weather the trouble. A Tampa real estate investment attorney from the Seward Law Office can help you determine what is best for you and yours – call our office today to schedule a consultation.
