so should you get an LLC for your real estate investing business I'm gonna go
and answer that question in this video so stick around hey what's going on in
Sam Kwok one of the Kwak brothers real estate investor and in this video I'm
gonna go and answer the question should I get an LLC for my real estate
investing business now before we go on I just want to make sure you guys
understand that I'm not an an attorney I am NOT an accountant so please don't
misconstrue this video as a legal advice be sure you consult the licensed
attorney to get a better idea for your situation and for your unique scenario
cool so I'm just gonna go and explain to you guys how we're using our LLC my
brother and I to grow our ghost investing business as well as our
passive income portfolio so an LLC stands for limited liability company
also interchangeably a limited liability corporation so I'm gonna go and draw
this on the board give you guys a visual illustration a limited library
corporation gives you certain features and benefits in terms of legal
protection there might be also tax strategies that relate to LLC we're not
going to get into that today in fact we're gonna go and bring in an
accountant and we're gonna interview an accountant to give you guys some tax
benefits of using an LLC cool so in our case we use an LLC as legal protection
and here's one of the protection that we get to take advantage of using an LLC so
we actually own several properties inside of our LLC in fact we have
multiple LLC's and I'll explain to you guys why we have a rental property okay
inside of an LLC let's say for example one day someone walks by our rental
property trips and falls and decides to sue us because they're hurt now
typically they're gonna try to sue the owner of the property in which in this
case the owner of this rental property is our LLC okay now when these when this
person who tripped unfortunately sues the LLC the LLC also creates a barrier a
legal barrier between the LLC the the the rental property and its possessions
and us personally okay so there's a personal
protection so they can't sue us directly they have to sue the LLC and when they
let's say they are successful and they win the lawsuit you know we're at fault
we have to pay damages what's nice is that we are not liable for those damages
the LLC is so that means they can't come after our personal possessions they
can't come after our personal property that can't come after our personal home
they can't come after our personal cars we have this protection where it's a
separate entity between us us personally and the LLC now there are certain things
you can do to to break that barrier in which you may want to consult your
attorney as far as what you need to do to keep that barrier and one of the
things that my attorney is suggesting is that make sure you have a separate
bookkeeping have a separate bank account separate policy separate standard
procedures mainly because if you do end up going to court the judge may want to
see that you've been treating this LLC this company as a separate thing so make
sure and this is again this is not only going fine so make sure you consult with
an attorney but it our attorney is suggesting that you keep all procedures
bank account as well as how you handle money separate from your personal
account cool so that's one of the things that the LLC gives us as far as legal
protection some some of the things that could help you down the road another
thing that that the LLC may also give you in terms of benefits and while you
may need one again you may not need one right off the bat okay consult with an
attorney on that but you may not need one right off the bat what what is nice
about the LLC is that you can go ahead and set up a separate business bank
account you can go and set up a the LLC has its
own tax ID you can also get a separate business credit which actually is gonna
be a separate video that we're gonna go and create but you can go and create a
separate credit just for your business so that your business credit and your
personal credit is separate they have different credit score's
they have different reports it's it's a great way to build business cry
if you have a poor personal credit so an LLC may give you protection now the
reason why we have separate and different LLC's okay we have multiple
LLC's in fact is mainly because we want to keep the liability separate we don't
want one lawsuit to affect all of our properties so let's say all of our
rental property all you know gosh seventy nine units are all in one LLC
okay let's say we have multiple rental properties inside of just one LLC now
what tends to be the problem is that if one of the rental property goes down in
a lawsuit and we are you know we owe millions of dollars in judgment we have
to sell all of our other mental properties inside that same LLC to
satisfy that judgment or the law sort of damage that we have to pay but if we
have a separate LLC for example okay if we decide to place our rental properties
in different LLC's okay one lawsuit here in this this LLC is not going to go and
infect our other LLC's that we have and they're given properties so that way it
gives us extra measure of protection in case we run to a lawsuit or liability
issues whatever the case might be all of our other property is is being protected
this is actually one of the big reasons why ambulance companies use different
LLC's each ambulance may have its own LLC so it might be a one giant ambulance
company the ambulance company hat may have its own you know mother holding
company it may have different LLC's for individual ambulance trucks okay and one
LLC might hold just one or two ambulance trucks mainly because ambulances have
liabilities right because what if there was a mishandling of the patient and the
patient dies well you know that they can get in trouble you can get in lawsuit so
they don't want that one lawsuit affecting all their other ambulance and
trucks and other assets they may have so they split up all these different
assets into different LLC's mainly because of legal protections so be sure
to consult within a licensed and competent attorney whether you need an
LLC or not it may depending on how much asset you have what type of rental
properties you have are you married are you not that may all change the the
answer to do you need an Alistar or not maybe you need a living trust maybe you
need a S corporation maybe you need a limited partnership so an LLC is one of
the more common entities at roasted investors use to protect themselves
protect the property as well as keep things separate keep the liabilities
separate from from the personal liability as well as the business
liability so I hope this answers your question do you need an LLC or not my
answer always is consult an attorney but generally well for what we do we use an
LLC for our legal protection as well as keeping liability separate now be sure
to go watch our other video on how to buy rental property without using your
own money or credit yes it's possible we've done it so we're gonna show you
guys how to do it go and click on this video right here how to buy rental
properties without using your own money or credit I'll see you guys there