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If you own rental real estate you have a liability relating to your tenant’s safety. Beyond making sure any property you own is safe most attorneys advise setting up a separate legal entity to hold your investment real estate. There was recently an article at Forbes online Attention Landlords: Beware Litigious Tenants by Stephanie Fitch. It addressed this common concern for real estate investors.
In the article Chuck Bleck a Chicago real estate investor recommends an LLC over a corporation to hold real estate assets. The article states:
“For a tax or real estate attorney you’ll find that putting an investment property into an LLC is routine. You’ll likely sign a warranty deed that moves the property into the LLC. The cost should be no more than a few hundred dollars. Bleck pays a small annual fee to the Illinois secretary of state to keep his LLC in good standing. If your attorney advises you to establish a corporation for your investment property get a second opinion.”
Legalzoom.com is a good website for simple legal documents such as setting up an LLC (Limited Liability Corporation) once you are familiar with the process and the legal protection you should have in place. If you are uncertain definitely spring for an estate or real estate attorney. This is an area where you want to be a proactive and responsible investor.