How Can You Increase the Protection of the LLC Holding Your Commercial Real Estate?
A limited liability company, or LLC, is one of the most well-known corporate structures used by business owners and commercial real estate investors alike. An LLC offers flexibility and combines features of a partnership with that of a corporation. While each state has its own laws that govern the level of protection an LLC offers, there are a number of commonalities that make limited liability companies useful for commercial real estate investors.
Title Your LLC to a Limited Partnership
Independent commercial real estate investors are open to legal attacks from creditors. By titling an LLC as a limited partnership, commercial real estate investors get an extra layer of protection – even more so if thee LLC is not directly in the investor’s name. If investors want to increase the protection of their LLC, they can have it owned by an international asset protection entity, which is very useful as portfolios grow and significant properties are acquired.
Look at Your Operating Agreement
If you want to protect your investment properties, the first thing you have to look at is how your LLC is structured. Take a deep dive into your operating agreement with your attorney or insurance representative to see how the LLC defines your protection. At the very least, your personal and property finances should not have any crossover. Additionally, if personal expenses are paid from or to the LLC, protections claims will be more challenging to uphold if legal action is brought against you.
Guarding Your Wealth
To further protect commercial real estate investments, you can strip any equity you personally have in your LLC. For creditors looking in from the outside, if there is no wealth to be gained, any legal action is not worth their time, and they are more likely to move onto someone who hasn’t taken the same precautions as you. Guarding your wealth through your LLC is essential to long-term success.
If you would like to learn more about creating an LLC for your property investments, or to learn how to further protect your commercial real estate investments through your LLC, contact the experts at CounselPro Lending today.