2. Real estate is often promoted as one of the safer
investment strategies to follow. Granted, it
would be inaccurate to say that there is no risk
involved with real estate investing. However,
there is less risk than what would be found with
other real estate plans. However, risk will be
present which is why it is vital to take the steps
necessary to protect your assets. Remember,
when you do not effectively take steps towards
asset protection, you run the risk of losing them.
Thankfully, there are a few basic steps that can
be employed to boost asset protection
significantly.
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3. First, it certainly does not hurt to work with a
real estate attorney that understands the basics
of asset protection. When you try to navigate
such a complicated issue from a perspective of
limited understanding, you run the risk of
undermining your venture. As such, it is wise to
consult with those that are experienced in such
matters. This way, your asset protection
becomes “air tight” and prevents any potential
loopholes from developing that can place your
personal assets at risk.
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4. If you are purchasing a property “here and there”
and holding them for later resale, you generally will
have limited assets at risk. However, if you are
looking to become involved with wholesaling or
other expansive real estate investment ventures
you need to clearly define what assets are at risk.
At this point, you need to determine a method
which will protect those assets.
For those curious as to what is the most common
step to take to protect their assets, it would be the
setting up of an LLC (Limited Liability Corporation)
and performing your real estate ventures under the
heading of the LLC. The concept of a LLC is rather
simple.
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5. You would operate your real estate
business/investing transactions under the name of
the LLC as opposed to yourself personally. This
way, in the unforeseen scenario where you are
held liable for something that occurs on your
property (i.e. a slip and fall accident), the assets
of the LLC (business) would be at risk as opposed
to your own personal assets. This type of
protection can prove significantly helpful in the
case of an unfortunate scenario where the
investor is held civilly liable. Similarly, issues of
filing bankruptcy could be handled by filing
bankruptcy on the business as opposed to
personal bankruptcy.
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6. Please note: forming a LLC does not exclude anyone
from personal responsibility nor does it provide a
means of skirting the law. This is a common
misconception. Its prime purpose is to protect for
personal asset protection. Nothing more and nothing
less is at play here.
Another asset protection method would be to set up
a C Corporation. This type of corporation is set up
for income tax purposes. When you are wholesaling
and involved in more expansive real estate ventures,
you probably would be best served filing taxes on
the ventures under the C Corporation as opposed to
a sole proprietorship.
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7. This could help provide more effective personal
asset protection as it relates to taxation issues. The
goal here is to stay in compliance with all tax laws
but keeping the business separate from your
personal tax filings.
Any type of expansive real estate investment plan
will place a certain amount of your assets at risk.
That is why asset protection is vital. It draws the
proverbial line in the sand in terms of what assets
are at risk and to what degree. That’s why exploring
options with LLC and C Corporations are helpful.
But, there is a much better way to ensure asset
protection: make profitable real estate transactions!
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8. Wholesale Real Estate Source is a Real
Estate Investment Company that Buys and
Sells Wholesale Foreclosed Properties
Nationwide. To Learn More About Us and
Available Properties for Sale visit....
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