Why Florida?
When people think of real estate investment, Florida tends to be one of the first places to consider. But why?
First of all, nothing is more appealing than the beautiful beaches, warm sunny weather and luxurious lifestyle that people associate with Florida. Snowbirds, retirees, foreign investors and tourists come to Florida in droves. This influx of people has created a steady boom in the real estate market, which has created jobs and a low unemployment rate. The strong trend of tourism entices people to work in theme parks, hotels, restaurants and other businesses that profit from tourism.
As a peninsula, Florida has many coastal cities that provide profitable benefits in real estate investments because of the lucrative investments offered by vacation homes. This profitable investment has driven more and more middle to upper class families, both domestic and abroad, to purchase vacation homes on the coast for summer vacationers or snowbirds in the winter. In addition, many homeowners are willing to pay a premium for the luxury of a lake or ocean view home, knowing that renters seek and prefer this type of property.
Florida’s rising real estate market has also created a variety of investment opportunities such as residential homes (single family homes, condominiums, apartments, multi-family buildings), commercial buildings (office buildings), industrial investments (warehouses, storage units), retail buildings (strip malls, shopping centers, storefronts), and combination buildings (such as the above storefronts with residential units) that can all be leased to different types of tenants for short or long term rentals.
Additionally, due to the international intersection of Florida’s location, cities such as Miami, Orlando and Tampa have made Florida an international center. Cities like Boca Raton, Davie and Fort Lauderdale are experiencing exponential growth in the real estate market. This positions Florida as a strategic and economic opportunity for domestic and international real estate investors to take advantage of natural market growth, diversify their real estate investment portfolio, or make personal real estate purchases. The most important thing to remember when investing in real estate is to invest wisely – use an LLC and contact Pascal Gibert!
Why Create an LLC to Invest in Real Estate?
The use of a Florida corporation to purchase real estate is one of the issues recently debated by legal scholars. But for Gibert USA, it’s a no-brainer.
Using an LLC to purchase real estate is the smart thing to do for the majority of our clients. French-speaking clients looking to purchase real estate in Florida, whether as an investment or for personal use, should use a Florida LLC because of all the advantages it provides.
Without a doubt the advantage of creating an LLC for our European or Quebecois clients is to protect their privacy. Indeed, the owners of real estate in Florida are easily accessible online on public records. Therefore, acquiring the property through an LLC allows for buyer privacy, as the LLC will be designated as the owner of the property.
Another important benefit of using an LLC is asset protection. In the event of a judgment against a client, the property is protected under the LLC’s name. If the lawsuit names the LLC, only the assets owned by the LLC can be used to pay the lawsuit. Owning property through an LLC can also reduce rental liability.
Tax planning is an important benefit of using an LLC to purchase real estate; LLCs are transparent entities limiting tax liabilities in both the United States and the client’s home country.
In addition, LLCs are a valuable asset for the flexible nature and protection they offer, hence their popularity. According to the Florida Department of State, two-thirds of all new business entities in 2017 were limited liability companies. That number is expected to increase significantly thanks to the Jobs and Jobs Creation Tax Reduction Act, which provides favorable tax treatment for business entities.
What Should I Should Know Before Creating an LLC?
If purchasing multiple properties, should you use one LLC or multiple LLCs? It is recommended that you form an individual LLC for each property purchased. This ensures that the investor’s liability exposure for a property is limited to that one property. If multiple properties are owned by one LLC, liability resulting from one of the properties could result in exposure and enforcement on all properties owned by the LLC. If each property is owned by an individual LLC, the maximum exposure to any one property or LLC would be limited to the LLC’s property.
Another important thing to keep in mind is that there should be no commingling of assets – all taxes and fees for the property must be paid by the LLC and not by the client’s personal account.