LLC Real Estate Investments

LLC Real Estate Invetments What is an LLC (Limited Liability Corporation)?
LLC Definition: An LLC created for real estate investment has the characteristics of a corporation, but it is not. It does offer some of the benefits of a corporation, particularly the limitation of an owner's liability. An LLC provides lawsuit protection, credibility, tax savings, asset protection, anonymity, the ease of raising capital, creating a separate legal entity for personal protection for the investors, an LLC has a broad range of powers beyond that of a sole proprietorship, small claims court benefits, separate liability for corporate debts, and perpetual duration. When you form an LLC you create a separate legal person and you are a member. LLCs are preferred because they combine the limited liability protection of a corporation and the pass through taxation of a or partnership. The downside to an LLC is that it does not offer the free transferability of ownership, perpetual existence, and the ability to be owned by a single individual.

Investors can obtain small ownership of commercial properties in lower investment amounts than Tenant-in- Common interests. Typical investment amounts start at $25,000 and up.

Diligent Financial Group works with the nation’s leading LLC property sponsors, helping our clients select from a variety of high quality LLC programs. We especially seek those programs that offer fractional real estate ownership of large, investment-grade income properties around the country.

We search for only the best of retail, hospitality, office, shopping center, oil & gas, multi-family property offerings. We do not offer proprietary investment products, but rather only those properties that survive our demanding, thorough due diligence process.

LLC Benefits

LLC’s can provide a professionally managed, institutionally funded “turn-key” real estate solution with many benefits to the individual investor such as:

  • Achieve potentially higher net cash flow with less liability (non-recourse debt)
  • Creates access to a larger pool of higher-quality, institutional-grade investment properties
  • Allows investors with limited funds to enjoy geographic diversification
  • Enables investors to trade time and labor intensive properties for more passive forms of real estate ownership
  • Passive Income generated by property can be used to offset Passive Losses with no phase out based on any income level
  • Triple-net lease structure provides stable returns
  • Interest can be transferred the same as sole ownership property
  • Eliminate management obligations
  • Generate renewed tax deductions that permit greater tax savings
  • Benefit from the extensive due diligence performed

LLC Risks

  • Available to accredited investors
  • LLC’s are subject to the usual risks of real estate
  • Cash flows and returns are not guaranteed
  • LLC interests involve fees that may offset tax savings
  • LLC interests are generally illiquid. There is currently is no market
  • LLC interests require a high level of due diligence
  • LLC interest risks include failure to meet required completion deadlines as well as the potential lack of cash flow
  • Value of property could decline
  • Loan default could result in loss of entire investment
  • LLC interests' values can be negatively affected by fees and costs
  • Co-owners of LLC properties do not directly participate in the day-to-day management of the properties
  • LLC interests may be subject to unfavorable tax rulings which could result in immediate tax liabilities
  • No 1031 exchange available for LLC interests

Investment Property Types

  • Commercial
  • Office
  • Retail
  • Shopping Center
  • Industrial
  • Multi-Family
  • Energy
  • Other