If you are the owner of a few or more investment properties, you’ve might’ve asked about incorporating or setting up a limited liability company to protect your personal assets.
According to Richmond real estate attorney Katja Hill, via CNN Money, it is better to set up a limited liability company than it is to incorporate.
“LLCs are easier to maintain, she says, than the ‘Scorp’ corporate structure that’s also used by small businesses,” reported CNN Money.
Lenders, however, can make it hard for owners to “move a mortgaged property to an LLC. A transfer might also trigger a tax hit (not likely in Virginia, but rules vary by area).”
The best way to shield assets, according to CNN Money, is to purchase “umbrella insurance.” Hill also advices getting a policy in addition to the LLC.
Please read “Should real estate investors incorporate?” for details.