Protecting You Personal Assets from Real Estate Investment Risks

Real Estate InvestmentIt takes years to build your assets like that of a car, home and other valuable assets. Purchasing a property in the current times is not at all possible without loans. This is because the real estate prices have moved way up and the income of the individuals no matter what they are earning are not sufficient to meet the money required to purchase real estate properties. Apart from this, the qualification criteria for being eligible for the loans has become really tough and one has to keep track of their finances and the credit score in order to be eligible for the loans.

So, if you are really looking for the real estate investment, you will need to make a clear understanding of the loan amount you require and you can afford. There needs to be a well thought of plan for the property search and look for something within the budget you have decided on looking at your financials. Another important aspect which you cannot discount if you are going to take a real estate loan is the repayment capability of yours. There are times when the borrowers fail to make the loan repayments as per the agreed terms and conditions. These are really difficult situations and the lenders too have to take steps to secure their money. In most of the cases they take to foreclosures. However, if the real estate markets are falling , the lenders cannot sell the properties or they do not get the value which could clear your loans. In such cases the lenders can even sell your other assets to cover their losses.

Thus, it becomes really essential that you understand the basics involved into mortgage funding and the ways to save your property from coming under foreclosure.

Let us look at the options available to protect your assets from the real estate investment risks:

Checklist: Investing in Real Estate as a Group

Form a limited liability company. Any real estate purchase in your own name can expose you in the eyes of the lenders send you will be personally liable for the default on the eon installment loans. This implies to your assets as well which will be used by the lenders to sell off and recover their losses. So all your personal assets can be at risk in case of the non-payment. However, if you form al LLC or a limited liability company, you are not directly liable for the payments. In fact the onus of the repayments shifts to the LLC offering you a safety net. LLCs offer multiple benefits since they are easy to set up, offer safety net from the double taxation. If you have opened a LLC you need to assure that all the transactions that you make are done using the name of the LLC only. You can also instruct the agents and the brokers you are dealing with to ensure that they do all the paperwork in the name of the LLC only.

Transfer personal assets via trusts. Another way to deal with your assets and its protection is to transfer your assets into someone else’s name. It could be anyone in your family be it your spouse , children or parents who are elderly and non-working. By doing so you lose the rights to the assets in the first place. However, if you are found guilty of non-payments of the property loan, none of these assets will be confiscated for the reason that they do not belong to you. Thus it is not only a fact that you save your property but also get some tax benefits as laid out by the IRS. However, there are other taxes which may trigger and you can see your assets being safe but the process of protecting them requiring more money.

Consider real estate investment trusts (REITs). If you have limited money but you want to invest in the real estate sector or are already invested, you can still get great returns on your investments. This is by way of forming a group of individual investors who pool their assets into one and then invest in the real estate to het the real benefits. These are similar to the shares that you buy of the companies. Real estate investment trusts or REITs as they are called allow you to remain invested for the time period you want and can immediately liquidate your investments the day you want. In  this way you will have a great investment which offers you sustained and guaranteed returns and easy withdrawal process to pull out of it. Thus you can save your asset.

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