SUMMARY: Investment properties can create liabilities. Things like parking lots, laundry rooms, staircases and tenants themselves can all bring liabilities to the property owner. Precautionary measures should be taken to protect the investor and his or her investment, and forming an LLC may very well be the first step in sound risk management.

A limited liability company, or LLC, is presently the favored asset protection vehicle for most real estate investors. An LLC combines the best attributes of a corporation and a partnership. With it, the investors’ personal assets, including the primary residence, are generally protected from claims by creditors of the LLC. The investors gain personal liability protection, tax advantages and other benefits, as well.

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