Disclaimer |
| If you want legal more legal advice, please consult your attorney or ours. We are in the real estate business and legal /tax questions are best handled with these professionals. Our specialty is finding properties and managing them for our investors. |
If you are paying cash, create an LLC or LLP First |
| The cost of moving a property from privately owned to a different entity cost the sales transfer taxes which is about 1.5% of the value of the property. You can save money by having the property in the LLC or LLP. The major benefit of having a property in an LLC/LLP is so that you shield your other assets from possible litigation. |
If you are getting a loan, you can transfer the asset to the LLC or LLP later. |
| Most investors do not have an LLC or LLP that is capable of getting a loan in that entity. However, it's a good time to start. Over time, that entity will have the credit history to purchase it's own assets. This is long term strategic thinking that many investors don't consider. |
Citizenship Recommendations |
| We recommend US Citizens use an LLC while Canadians should use an LLP. All other countries have different rules and we haven't created a table yet for the rest of you folks. |
Protect Yourself Further |
| You can get additional protection from lawsuits by putting your legal entities into a living trust. Not only does this give you additional protection, it provides you with a cleaner method of transferring your wealth when your time has come. Since you don't know when that is, just do it now. |
Get a UPS Box - NOT A US POST OFFICE BOX |
| UPS is not the same as a US Postal Service. They sound the same but they are radically different. Title companies and the tax assessor will interpret a UPS box as a business address and will accept that if you keep quiet as to what it actually is. The benefit to you is that your tenants will not know where you live. Nothing will get your spouse pissed off more than having some hostile tenant pounding on your door at 7pm. |
Record of owner address should not be the property address. |
| Under no circumstances should you make your investment property address the address of record. You do not want tax bills and other urgent and important items ending up in the hands of your tenants. There is nothing more distressful than having tax liens on your property. Tax liens are very difficult to remove and show up on your credit. This should run shivers down your spine. |
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