will be taxed, only residential properties with a loan may qualify for a tax break, depending on current tax law.
• If your goal is to take on multiple rental properties, it’s easier to do so with commercial properties due to Real Estate Investment Trust (REIT) regulations. • Residential properties cost less to purchase, and you have a lower holding period for returns. However, they tend to bring in lower rent. Conversely, commercial properties get a higher yield and returns. Also, their property values are more stable. However, they may require hiring a property manager, having more (or more complicated) leasing strategies, and require a more detail-oriented approach. • Residential properties need to be move-in and live-in ready and their size isn’t too critical. In contrast, commercial properties can be a warm or bare shell and they might need to be a certain size to make the property practical for potential leasers.
CONSIDERING AN LLC
Many people who own rental properties opt to set up their business as an LLC. This means that all properties are owned, bought, and sold through a business rather than through a person. Also, the property itself is considered a business, so when you sell the property, you sell the business. The main reason that many people choose to set up an LLC is that it provides protection from being sued on a personal level. However, this doesn’t stop the company from being sued. This
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