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How is an LLC best utilized in real estate?

I learned that just having an LLC isn’t enough to protect you from lawsuits and other judgements that could end up taking your personal property. The best advice I was given is to setup a partnership between two LLCs. The following is just how “I” did it and not necessarily advice. The primary LLC will hold 99% of the shares and is to handle your real estate transactions and the secondary will have a 1% interest in the partnership. For tax purposes, the primary LLC should be a “C” Corporation. The origin of the secondary LLC is in Wyoming with the primary being in the state you plan on doing business in. Each LLC also has it’s own checking and savings accounts in their respective names. The business purpose of the second LLC is for “Real Estate Consulting” and not for real estate transactions. The main business purpose of the primary LLC is for “Real Estate”.

Now, as far as how an LLC is best utilized? When you acquire properties you should always use the name of your primary LLC on the documentation. This helps cover your personal assets should a lawsuit arise. In that instance, your LLC would be on the hook. As long as you disclose and do everything above board you shouldn’t stress over the “what ifs” but don’t try to hide behind your LLC, it may appear as if you’re operating unethically.

I obtained my information from Albert Aiello’s “LLC Master Machine Asset Protection System”. Registered Agent Service – National Registered Agents is my LLC agent. I highly recommend using an LLC if you’re considering starting your own real estate business. Check with your local Division of Professional Business Relations in your state for specific rules. It may go by a different name, depending on your locality.