Investing in real estate here in Arizona can either be an amazing venture or a bankruptcy waiting to happen. Investing in Arizona real estate is about making a profit so that you can invest in another home, and continue that profitable margin so that eventually you have many properties and many years of success. But, as we well know, investing in Arizona real estate can be tricky, which is why speaking with legal counsel is a wonderful first step.
Arizona Real Estate Investing
Before jumping into real estate investing, take some time to truly analyze your strategy. Why are you investing? What types of income are you hoping to reap from investing? What type of investing are you looking to do; tax benefit realization, property appreciation, principal reduction or cash flow? Will you be a passive or active investor? Will you be investing in apartments or commercial property?
Understanding the risks involved with Arizona real estate investing in also a crucial step. Have you taken into account taxes, utilities, insurance, and any renovations that need to be made to the property? If you’re investing in a commercial real estate, have you factored in any management?
Understanding the profits vs the risks is crucial as well. Are you looking for appreciation real estate, where upgrades in the area will add value to a property? How much value will be added to this property vs how much you will spend on purchasing and renovations? Will you be looking into commercial investments, where cash flow will depend on what you can charge in rent?
Protect Yourself with an LLC
Before you make any decisions about investing in Arizona real estate, sit down with some legal counsel to determine if an LLC will benefit you. By establishing a Limited Liability Company for your investment properties, you will be protecting yourself against liability and financial risks related to that purchase. As an LLC, should something go wrong with the investment property, whether it’s a commercial investment or single-family investment, your personal assets will remain protected.
You can form a company owning real estate that can be served quite well under an LLC. As an LLC, you can protect your personal assets such as stocks, bank accounts, and/or vehicles should the renter of your property file a claim against you. Commercially owned investments and rental properties come with great financial risk such as potential environmental claims, fire-related claims, slip and fall claims, and a variety of injury claims. It is crucial that you protect your personal assets against these claims with an LLC.
If you are interested in investing in Arizona real estate, contact us today to get started. If you are interested in setting up an LLC to protect your assets, contact Scott Schoeller.