All the different types of ownership have their own advantages and disadvantages Life changes can play a big role in how you take title to investment property?In this article I will put forth some ideas of how smaller investors can group together with family, other friends and people you know to leverage your money to purchase investment real estate.Here at cannon real estate Carlsbad property management will will advise you to seek legal counsel when putting together a partnership to purchase property.
Group Investing
?The best way to work with a small group of investors is to have a group where everyone intends to ?and is able to make a decision. group investments where not everyone is able to make a decision can be problematic because the partnership could be construed as an investment contract?(Real Estate security which you need to know what is a security) especially in Limited partnerships ?especially if one of the partners is doing property management.?
Tenants in common
This is a way to hold ownership as a partnership but from a liability standpoint the LLC is a much better vehicle. however the tenants is common held for a short duration in a flip scenario will be less expensive and may be a good choice for some partnerships.?
LLC
LLC is a better way to hold title than a limited partnership or as tenants in common. The LLc is comparable to limited partnership except no general liability partner. In the LLC ?liability extends to all members. Also a partnership is more restrictive tax wise than a LLC, however in the LCC you have yearly filing costs in California of $800.00 and these fees may go up looking at the state economy and their need to increase revenues. ?The LLC does not pay Federal taxes instead the profit or loses are passed on to the individuals.
Holding title in a land Trust
The basic purpose of holding title in a land trust is to be anonymous and as an asset protection device just makes it harder for someone to find your assets but is not asset protection by itself. ?Sometimes it might make sense to hold property in a land trust and then into an llc.
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The bottom line is that there is no set asset protection that is best for everyone. Most lawyers have differing views on how to protect your assets but most agree that the LLC for asset protection of your real estate is one of the best vechicles.?
Your Personal residence
The american dream is to own your personal residence free and clear however the problem arises with asset protection. it is very hard to protect your own residence from creditors in the event of a lawsiite. A trust does not protect you from creditors and you can not put your own home into an LLC. The only way to really protect your home from lawsuites is to have no equity.
Here at Cannon Real Estate we will give you advise and opinions on taking title and asset protection but we always advise you to seek legal counsel and to also seek the advice of an accountant.
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Source: http://cannonrealestate.com/group-investing-and-asset-protection
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