The Benefits of Utilizing an LLC for Real Estate Investments

Investing in U.S. real estate? Consider getting an LLC.

From legal liability to tax obligations and financing hurdles, holding property in your own name can expose you to unnecessary risk. That’s why many international investors choose to form a Limited Liability Company (LLC) to manage their real estate holdings. 

An LLC is a business structure that combines the asset protection of a corporation with the flexibility of a partnership. It allows foreign investors to separate their personal assets from their U.S. investments, helping to limit legal exposure and streamline ownership.

When you invest through an LLC, you're shifting the responsibilities—and risks—of ownership from yourself to the company. Let’s take a closer look at the specific benefits of this structure and why it may be the right fit for your situation.

Key takeaways

• An LLC helps shield your personal and international assets from lawsuits or financial claims tied to your U.S. property. If someone sues over an incident at your rental, only the LLC’s assets are at risk—not your personal home, savings, or other global holdings.
  
  
• LLCs offer “pass-through” taxation, which may help you avoid double taxation and allows you to deduct key expenses like mortgage interest, depreciation, and repairs.
  
  
• LLCs enable multiple owners and the ability to isolate risk by using separate LLCs for different properties.
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Protection of personal assets 

One of the primary reasons investors, especially those based abroad, choose to set up an LLC for U.S. real estate is to limit personal liability. When a property is owned through an LLC, the legal and financial responsibility for incidents tied to that property typically falls on the company rather than the individual. For example, if someone is injured on the property and files a lawsuit, they would generally pursue a claim against the LLC. In most cases, this means only the LLC’s assets are at risk, not your personal savings, home, or international holdings.

That said, liability protection is not guaranteed in every situation. If you personally guarantee a loan, commingle funds, or fail to follow proper legal formalities, a court could disregard the LLC structure and hold you personally liable. This is known as "piercing the corporate veil." To avoid this, it's important to maintain clear boundaries between personal and business finances and work with legal and tax professionals to ensure your LLC is properly structured and compliant.

Tax benefits 

From a tax perspective, one of the key advantages of an LLC is its classification as a “pass-through” entity. This means the LLC itself does not pay U.S. federal income taxes; instead, the income and expenses flow through to the individual members, who report them on their personal tax returns. This structure helps avoid the double taxation that traditional corporations often face, where profits are taxed at both the corporate and shareholder levels. In addition, LLCs can typically deduct a wide range of expenses related to real estate operations, including mortgage interest, property taxes, depreciation, repairs, maintenance, and management fees.

Keep in mind that tax treatment can vary depending on how your LLC is structured and where you reside. Foreign investors may also be subject to different reporting requirements or withholding taxes in the United States and in their home countries. That’s why it’s essential to consult with qualified tax and legal professionals—both in the U.S. and in your country of residence—to ensure compliance and optimize your overall tax strategy.

Flexibility and simplicity 

While forming and managing an LLC does involve some setup and ongoing responsibilities, it is generally simpler and more flexible than other U.S. business structures like corporations. One major advantage is that an LLC can choose how it wants to be taxed by the IRS—either as a sole proprietorship, partnership, or corporation—depending on what makes the most sense for the owners. This flexibility can help foreign investors tailor the tax structure to fit their investment goals.

An LLC can also be owned by one person or multiple people, including individuals, other companies, trusts, or even other LLCs. In addition, LLCs allow for custom agreements between members. This means you can set up different ownership percentages, voting rights, and profit-sharing arrangements. For example, if you’re investing with family or business partners, you can decide in advance how profits will be split and how decisions will be made. Just keep in mind that these structures should be clearly documented in an operating agreement and reviewed by legal and tax professionals to make sure they follow U.S. laws and fit your specific situation.

Privacy and anonymity 

When you buy a property in your own name, your name becomes public record on the property deed and title documents, which anyone can access online or at the county recorder's office. This can expose you to unwanted solicitations, spam calls or emails, identity theft or harassment from potential creditors or litigants. However, when you buy a property through an LLC, the name of the LLC becomes public record on the property deed and title documents, not your name. This can shield you from unwanted attention and protect your personal information from being disclosed.

Unique financing options 

One of the biggest hurdles for international investors in the U.S. real estate market is access to financing. Traditional U.S. mortgage lenders often require a strong domestic credit history, verified income, and tax returns—requirements that many foreign nationals simply can't meet. Forming an LLC can open the door to alternative financing options specifically designed for investment properties, such as debt-service-coverage-ratio (DSCR) loans.

DSCR loans focus on the property’s income, not your personal income or credit score. Lenders evaluate whether the property's rental income is enough to cover the loan payments, making it ideal for foreign investors who may not have U.S.-based financial documentation. By purchasing property through an LLC, you're aligning your investment with how DSCR lenders typically underwrite deals—based on the property's performance as a business, not your personal financial background.

In this way, an LLC doesn’t just offer legal and tax advantages, it also positions you to access financing options that are more accessible, more flexible, and more focused on the property itself. For foreign nationals looking to build a U.S. real estate portfolio without the traditional roadblocks, an LLC can be a critical part of the financing strategy.

Set up an LLC with speed

Setting up an LLC from abroad can be complicated and time-consuming, often taking weeks or even months. Waltz’s Investor Kit simplifies this process with a ready-to-go solution designed for international real estate investors. 

When you purchase the Investor Kit, you receive a fully registered LLC in your chosen state along with an Employer Identification Number (EIN). It also includes an operating agreement, which lenders require for loan approval. Additionally, you get a registered agent and mail scanning service for one year. These services help you manage official documents and mail remotely.

By handling these essential steps efficiently, Waltz helps you build the right foundation to invest in U.S. real estate without delays or extra hassle.

Protect your U.S. real estate investments

Investing through an LLC can help protect your personal assets, offer tax benefits, and provide flexibility and privacy as you grow your real estate portfolio. It does involve costs such as filing, legal, and accounting fees, and it does not guarantee complete protection from liability or taxes. To ensure you choose the best structure for your needs, it’s important to consult with qualified legal and tax professionals before setting up an LLC.

Want to get an investment property loan through your LLC? Try Waltz!