You may have created a real estate business and as an investor and now have multiple properties you own and are responsible for. Taking care of multiple properties is a tremendous undertaking, and several potential problems can occur because of it. For example, it's important to protect your assets from potential liability lawsuits.
While you certainly can purchase liability insurance to help protect each of your properties in your business, it may not completely save all properties from being sold to pay for any damages in a lawsuit.
This is where a series limited liability company or series LLC is a good option for you. Here are some of the reasons why you should operate your real estate business under a series LLC umbrella.
Helps To Keep Your Properties Organized
A series LLC helps to keep all your properties organized under a parent company, with all your properties operating as their own individual companies. While they do function under the series LLC umbrella, they are treated as their own entities with their own taxes, income, bank accounts, and operating costs.
Each property under the series LLC must work according to the parent company's operating agreement. The parent company helps to organize each property, which is easier than if you kept them entirely separate from each other. This means your business will run smoother and you will have a better idea of how each of your properties is doing financially.
It Can Help Protect Your Properties From Liability Lawsuits
It's possible that even if you are on top of all repairs and maintain your properties to the best of your ability, problems and damage can occur. This damage could be the reason you might face a lawsuit from a tenant or visiting guest to one of your properties. This could be due to unforeseen electrical problems or leaking that went unnoticed until there was water damage. It can also be from tenants who have been destructive and have caused damage.
If one of your tenants or guests in the property decides to sue you, all of your properties could be at risk of being sold or mortgaged to help pay for the damages caused. In order to prevent that from happening, forming a series LLC can help protect your other properties from any liability lawsuits that might arise. Since each property is deemed a separate business under the parent company's umbrella, any other property can't be used to help pay for any compensation in a lawsuit.
It can also protect your other properties from any tax problems or other financial issues that could arise from any individual property. If you need to deal with your insurance company in order to pay for repairs that occur at a specific property, a series LLC will protect your other properties from insurance companies not paying what you are owed due to your other existing properties.
After thinking long and hard about what kind of home to buy, I began talking with a real estate agent about getting a deal that I could live with for the rest of my life. I really wanted to find a home and a deal that offered pleasant terms for me and my business, so I began focusing seriously on getting things done. It was amazing to me to see just how different various real estate deals were, and before I knew it, I was making some changes that would work for my lifestyle. Within a few months, things were a lot better. This website is all about understanding and applying real estate deals.