Why You Need an LLC
When you start investing in real estate, one of the first steps you should take is setting up an LLC (Limited Liability Company).
Whether you’re brand new or already have a few properties under your belt, an LLC can help protect you, organize your business, and even make it easier to get funding for your deals.
Important notes about LLC’s and real estate investing:
- Most lenders for investment properties require the loan to be in an LLC.
- Fix and flip loans, bridge loans, and most DSCR loans require or prefer lending to an LLC.
Protection of You and Your Assets
An LLC creates a legal separation between you and your investments.* That means:
- If something goes wrong with a property, your personal assets can be shielded.
- You’re running your real estate as a business, not as an individual (easier to expand your business funding and build business credit).
- This protection can give you peace of mind to grow with confidence.
*Note: we are not attorneys, so please don’t take these suggestions as legal advice.
A Business That Lenders Trust
Lenders see you differently when you invest through an LLC:
- Many investment property loans (like DSCR loans) are designed for business entities, not individuals.
- You have the option to set up business credit cards versus using personal cards. This allows you to protect your credit score.
- An LLC can make you look more professional and serious about your business.
Easier to Grow and Scale
When your investments are under an LLC, you’re set up to expand.
- Keep finances separate and organized.
- Bring on partners, investors, or private money more easily.
- Position yourself for long-term success and portfolio growth.
How to Set Up Your LLC Today
The process is simpler than most people think. Here are some resources we recommend:
Do it yourself (Cost $ equals typically less than $100).
- Contact your local secretary of state for requirements and names available. (For ease of banking and credit don’t use a common real estate investor based name for your LLC.)
- Use a service like rocketlawyer.com or legalzoom.com
- Set up your federal EIN number
- Set up a bank account
Have an expert help get it done fast and easy.
- Have a company that specializes in LLC formation help you (Cost $$ $100 to $300 depending on state fees)
- LLC company formation assistance
- Have a local attorney help you set up your LLC (Cost $$$ $500 to $2,500).
- Google local business attorneys
Pick the option that works best for you and get your LLC in place before your next deal.
Let’s Make It Happen
At The Cash Flow Company, we want to see you succeed. Protect yourself, look more professional to lenders, and unlock more funding opportunities by setting up your LLC.
Have questions about how an LLC impacts your funding options?
Call us today at 303-539-3000 or email us at info@thecashflowcompany.com.