Start Your New Real Estate Business Today
Follow our fast, easy process to get started right now.
Real estate is a great option for boosting cash flow, diversifying your investment portfolio, and building long-term financial security. A limited liability company (LLC) for your real estate investments helps you to protect your assets, capitalize on tax benefits, and set yourself up with a scalable business structure.
If you want to know how to form a real estate LLC, you’ve come to the right place. Attorney-backed and approved, we’re here to guide you through the process.
When forming an LLC for a real estate business, there are various considerations to ensure a more successful journey. Check out our many resources related to real estate LLC formation and real estate investing immediately below. Or, if you’re completely new to real estate investing, click here for a walkthrough of the basics.
Keep reading to learn about the basics of real estate LLC formation and real estate investing. Whether you want to flip houses, rent out Airbnb properties, become a real estate agent, or lease apartments, learn how to structure your business for success by going through our walkthrough, below.
Let’s start with the basics.
An LLC, or limited liability company, is a business structure that helps protect your personal assets. Defined by the state you register your business in, an LLC for real estate separates your personal liability from your business liability.
Simply put, if someone sues your business, your home, cars, and other personal valuables aren’t at risk. Creating an LLC can be a good idea — if someone slips and falls on one of your properties, that property may be held liable.
Investing in real estate can be a lucrative way to build wealth. Creating an LLC for your investments can help shield your personal assets from liability. It can also help protect your privacy. If you choose a name other than your own, your transactions come under the LLC and not your name.
For those investors managing properties, an LLC (or even multiple LLCs) helps protect against rental issues. As someone managing the homes where people live, you have great responsibilities. Keeping your business separate from your personal assets is essential.
Your real estate LLC can also leverage benefits such as a business bank account, flexible management, and advantageous tax structures.
If someone brings legal action against your business, your personal assets are safe. It makes your business a separate legal entity. You can take business risks without fearing a total loss.
Having an LLC makes it easier to invest in properties with other investors. Deed changes can be complex. With a real estate LLC (and our help), you simply update your operating agreement instead.
An LLC’s default tax structure is a pass-through entity where earned income is taxed just like your personal income. You can also update the tax structure to an S-Corp or C-Corp. Choose the tax structure that’s best for you.
With our process, an LLC is easy to form. It’s also easier to maintain than a corporation. Just click Start My Business, and we’ll take it from there. And we help you stay compliant, freeing you to focus on your investments.
Our 5-minute process makes it quick and easy to form a business in your state.
There are many aspects of running your own real estate company. It can feel overwhelming at first. Let’s walk through the most important aspects you’ll want to consider when starting an LLC. Remember, we are with you every step of the way.
Choosing the right legal structure is the first step. Each has advantages and disadvantages.
Sole proprietorships are the easiest structures if you’re the only one in your business. You don’t need to file or register anything with the state. Because there’s no legal separation between your business and personal life, a sole proprietorship leaves your personal assets liable if your business is sued. You also have little-to-no privacy. The drawback is your personal assets aren’t protected.
As we mentioned above, LLCs, or limited liability companies, protect your personal assets from business liabilities. They also offer flexible taxation options. We highly recommend you at least form an LLC to hold your real estate.
A corporation is a structure that supports outside funding and growth at the highest levels. These are complex structures to register and to keep compliant. We can help with both if this is your plan.
A business name can set you apart as you build trust and recognition in the market. People work with businesses they know, like, and trust. Your business name can create customer loyalty.
Your business name is an integral part of your brand identity. Start by brainstorming names that reflect your brand's values and ethos.
Once you have a shortlist, check for name availability in your state's business registry. You can often do this online via the state's Secretary of State website or business registration portal. It's also wise to conduct a trademark search using the United States Patent and Trademark Office's database. This ensures your chosen name isn't already trademarked by another entity. It helps prevent potential legal disputes in the future.
Once you have your name and structure, you’re set to form your LLC.
Creating a business plan for your real estate company gives you a roadmap to guide your success. It maps out your goals, strategies, financial projections, and operational details. A well-laid-out business plan gives you and potential investors clarity.
There are several different formats for writing a business plan for your company. Most plans include these sections:
The idea is to get everything out of your head and into a document. It covers both the big picture and the small details.
In general, the total average startup costs for forming a basic real estate LLC in the United States can range from $500 to $3,000 or more. Don’t forget about licenses and industry-specific certifications.
Talk to other business owners in your community — the real estate market varies by location. They’re a great resource for what to expect in running your business.
Build a strong network of professionals, such as agents, contractors, attorneys, and mortgage lenders. Valuable insights, resources, and potential business opportunities all come from building relationships.
You’ll also benefit from getting to know title companies and inspectors. Finding trusted partners can mean a smoother purchase process.
Building a community within the real estate industry can enhance your credibility and expand your reach, ultimately contributing to your company’s overall success and growth.
Decide whether you’ll manage rental property operations in-house or outsource to a professional property management company.
Aspects to consider include:
You may also want to separate your property management business from your investment business. Doing this is easy. You can register a DBA, or doing business as, or file for another LLC. We’re here to help with that!
Understand relevant local, state, and federal laws, regulations, and tax implications related to transactions, property ownership, and business operations. Compliance avoids potential legal issues.
Registering your real estate business as an LLC keeps compliance simpler than registering as a corporation. Regardless, each state has its own requirements. We designed our registered agent services to help you stay compliant.
As your business grows, so too does your tax responsibility. Make it a priority to know what’s best for your company. Outsourcing your accounting and bookkeeping can save you time and money. That’s why we offer those, too.
As someone investing in real estate, you don’t generally need to get your real estate license to do business. (Realtors do, of course!)
Some jurisdictions require licenses or permits for specific types of property. For example, the Short-Term Rental Registration Law in New York City requires anyone who rents properties to register with the Mayor’s Office of Special Enforcement.
For those who choose to manage properties, with very few exceptions, you can establish a separate management company to manage them. You just wouldn’t be able to manage properties for other owners or collect commissions.
If you’re going to conduct real estate transactions on behalf of somebody else, you need a license. You want to make sure to know the laws in your jurisdiction.
An often-missed aspect of running a successful real estate business is having a well-defined exit strategy, whether it's to the business, transfer ownership, or liquidate assets. You want a clear path for capitalizing on your investments and efforts.
You likely want your real estate LLC to fund your retirement. Your exit strategy outlines how to monetize your business best and convert it into a retirement nest egg or hold onto it for predictable income.
If attracting investors is in your long-term plan, potential candidates will want to know how you plan on leaving the business. This affects their return on investment.
LLC Attorney makes forming your real estate LLC fast and simple so you can focus on building your business.