To avoid dealing with tenants directly be it the collection of rents or when tenants decide to sue would it be better if you want to avoid any entanglements to form an LLC and use it to buy rental property? It would make the whole business [managing your rental properties] a lot easier but would this mean you pay more in taxes each year?
It's a very good idea to put your investments, real estate properties, etc into entities to minimize personal liability. A LLC basically treats the money as "pass through" - you'll be taxed on the individual level as a shareholder, as opposed to a standard corp that is taxed once at the corp level, and again at the individual level when you pay yourself compensation from the corp profits.
Pardon me but LLC is alien to me or perhaps the term is never heard. But from what I gathered with your posts, it is an investment manager that handles your property's concern from rental to maintenance. I hope I am right on my assumption but I sure wish that someone would enlighten me more on that LLC.
An acronym for a Limited Liability Company. https://en.wikipedia.org/wiki/Limited_liability_company A Limited Liability Company (LLC) is a hybrid business entity having certain characteristics of both a corporation and a partnership or sole proprietorship (depending on how many owners there are). An LLC, although a business entity, is a type of unincorporated association and is not a corporation. The primary characteristic an LLC shares with a corporation is limited liability, and the primary characteristic it shares with a partnership is the availability of pass-through income taxation. It is often more flexible than a corporation, and it is well-suited for companies with a single owner. More landlords should hear this. In addition to the advantage [minimizing personal liability] dealing with tenants as a third party would be less stressful.
I like the LLC as it allows the separation from personal to business. The LLC is relatively inexpensive to form and maintain. I also like that you get a separate business name which adds professionalism to your venture. And of course the liability issue is important in any business.
It's pretty much the same as forming a limited company (Ltd.) in the UK - quick, cheap and easy yet allows the convenience of separation between you and your business activities. You don't even need a lawyer to form a limited company here, it can all be done online in minutes.
Thank you for the information about LLC. I will research on that if there is LLC here. As I had posted in other threads, my plan when I retire from work is to build an apartment and rent it out to handle our daily expenses. And at this early, I am already realizing the problems that go with being a landlord. I used to be a tenant myself so I have been in touch with that business. And if that LLC is available here then perhaps it is a good investment that would relieve me of stress.
