I want to buy investment residential property. Should I form an LLC to protect personal assets?

Before jumping into the waters with both feet, I suggest you “test the waters” by putting a hand or a foot in that water. You should determine how you’re going to approach the whole project:.

Tax sales? Foreclosures? An overview: Due to the fact no one has the opportunity to physically inspect the interior of the property prior to the sale to determine exactly what the property needs, no one knows what he/she/they are getting into – how much its going to cost to bring a property up-to-code.

Pre-foreclosures? An overview: The residents of the house may have every attitude toward “bottom feeders” [because believe it or not, that’s what they call us - the professional real estate investors] from “Come on in, we can talk.” to down right defensive, rebellious and animalistic – answering the door with a baseball bat or even worse..

Word-of-mouth? Unless you already have a reputation for being a very fair and honest person – paying folks an almost-market price [OR exactly what they are asking] for their property, this will probably come into play until sometime in the future.

MY SUGGESTION: Join a local investment group or club to see how their members got started – AND BE ACTIVE!. From my experience and because of the group I belonged to and was active with – D.I.G. – the Diversified Real Estate Investors Group – I learned a lot and I shared a lot. All of us had a common interest and it was one of the best aspects of the organization! It was interesting! it was fun!

There are over 1,000 members in that group and meet once a month in a Masonic Temple. The group has a monthly newsletter.

At the general meeting, there are guest speakers and there are smaller groups for investors with different interests: new member services; financing and acquisition; foreclosures; shore properties; real estate law; experiences with local housing authorities and Section 8 tenants, etc. The group goes on cruises and has other exciting functions.

In addition, we had sub-groups which met twice monthly – once for breakfast and another time for dinner and cocktails. It’s a terrific group of folks.

I discovered many of the newer and newest members acted on their own behalf and in their own name. After they acquired a few properties, they looked into forming their LLCs and Subchapter S corporations.

The whole organization and my experiences with those fabulous folks were wonderful!

I use the past tense, because we accumulated the properties we wanted and I moved on to other investment opportunities.

Thank you for asking your question. I enjoyed taking the time to answer your question. You did a great job – not only for your information, but for every other person interested in reading my answer.

I wish you well!

VTY,
Ron Berue