Real Estate Investors Can Protect Personal Assets by Using an LLC

A lover of golf and music, Geoffrey “Geoff” J. Block is an entrepreneur and self-employed manager. Geoff Block’s company owns the building housing the offices of Land Rover USA, a real property managed by The Becker Organization.

Real estate is one of the most popular asset classes. Many individuals seeking passive income and financial independence have gone into the real estate business. There are different types of real estate — including commercial, residential, industrial, retail, and mixed-use properties, each with its own potential benefits. Regardless of the type of property they focus on, however, most real estate investors don’t buy investments directly in their own names. Instead, they purchase investments under a legal entity, such as a Limited Liability Corporation.

A major reason for this is personal asset protection. In the event something goes wrong, investors who are also sole proprietors may find themselves with liabilities that exceed their insurance coverage. As a result, they may be held personally financially responsible for the losses. On the other hand, if the property is held in the name of an LLC or other corporate entity, that entity will take financial responsibility, thus safeguarding investors’ personal assets.