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The video discusses the advantages and disadvantages of owning real estate through an LLC. The speaker, who owns over $40 million worth of real estate, has 14 LLCs, with each LLC owning 20 to 30 single-family rentals or one apartment complex. The first and most important advantage of owning real estate through an LLC is that it is a mindset thing. If you buy real estate through your personal name, it can limit your thinking and prevent you from scaling your business. Setting up an LLC for real estate ownership can help you treat it like a business and take it more seriously. This mindset can help you scale your business and achieve financial freedom faster.
One major disadvantage of owning real estate through an LLC is that you may not be able to get as good loan terms as you would if you bought properties in your personal name. Commercial loans for LLCs have slightly worse terms than residential loans for personal names. However, a little hack is to buy your first 10 properties in your personal name to get better rates and terms, and then quick claim them over to your LLC once it's set up.
Another advantage of owning real estate through an LLC is the legal protection it provides. If someone gets hurt on your property or tries to sue you, they can only go after the assets owned by the LLC, not your personal assets. However, there is a gray area with due upon sale clauses, and it's possible that transferring properties from your personal name to your LLC could be considered a sale and trigger the clause.
Owning real estate through an LLC provides flexibility in terms of selling and ownership. If you own a property personally, it can be confusing and overwhelming to sell or have multiple owners. However, if you own it through an LLC, you can have multiple owners and lay out ownership terms in the operating agreement.
One important advantage of owning real estate through an LLC is the accounting side of everything. Once you set up an LLC, you can track all your business expenses separately and start to build business credit. This can help you write off expenses and have business write-offs that will trickle down to your personal tax liabilities at the end of every year. Overall, the advantages of owning real estate through an LLC outweigh the disadvantages, and it's recommended to set up an LLC even before buying your first property.
The video discusses the advantages and disadvantages of owning real estate through an LLC. The speak