Real Estate Investor's LLC

Real Estate Investors

In today’s investment climate, investing in real estate can be a prudent and intelligent choice for a balanced investment strategy. A way to make that choice even more intelligent is to enlist Harvard Business Services, Inc. to help you place the ownership of your properties into separate Delaware Corporations or LLCs.

At HBS, we have specialized in Delaware business formations for more than 25 years. That longevity and leadership add up to the expertise not just to speed your business formation though the process, but to make sure every "i" is dotted and "t" is crossed exactly the way they should be.

Why incorporate?

1.Real Life
Ownership of one or several properties used for a variety of purposes comes with a host of unforeseeable risks and liabilities. If those properties are titled to a person—you, spouse, family member—you are personally liable for damage or losses that may arise from accidents, injuries, interruptions to business or other events.
Attorney representing the victims of those events will go after your personal assets—home, bank accounts, investments, furnishings—all of it. The only sensible and smart answer is to protect your personal assets by placing those properties in business entities that create a wall between you and the business of owning the properties. (See the example below.)

2. Benefits of Incorporating in Delaware

• Limited liability
• Asset protection
  • Homesteading & Insurance
  • Delaware Family Limited Partnerships
  • Delaware Corporations and Limited Liability Companies
  • International Corporations
  • Delaware Trusts
  • International Trusts
• Offsets inadequate insurance
• Pass-through taxation (with S-Corp and LLC)
• Business deductions for losses and expenses
• Enhanced credibility with existing and potential customers
• Investor attraction

3. Strategy
Many real estate investors have found the answer to protecting personal assets by utilizing a multiple-entity strategy.

The first entity is a Delaware Subchapter S corporation. This entity is your operating company, the one you use with your customers and suppliers. All payments flow into this company. Using a Sub S Corporation for the operating company gives you tax advantages and separates your real estate investment business from your personal assets. It protects your assets from the business’s potential liabilities, yet this Sub S Corporation doesn't own any of the real estate.

Each property is owned by and titled in the name of a separate Delaware LLC and leased to your operating company under a separate contract. Consequently, if one property is involved in a lawsuit, the other properties are beyond reach and can continue producing investment revenue.

LLCs are utilized to hold the assets because they are tax-free companies with strong liability protection. If you set them up correctly, you won't need to file separate tax returns for each LLC, saving time and money.

The strategy may not be an exact fit for every circumstance, so it would be wise to consult with your lawyer and accountant first and then rely on Harvard Business Services, Inc. to handle the details of filing and maintaining of your company.