Q: My wife and I want to start investing in real estate and want to do it right. Should we form a company first and place investment proper ties there, or hold properties inside our current business or hold them in our own names?

A: The million-dollar question. A lawyer will tell you to always place your investment property inside a company for liability reasons.

An accountant may tell you that the extra fees of setting up a company, annual reports etc. for most smaller investors are not necessary.

Well, both may be right. However, if someone wants to sue you in relation to an investment you hold, they will sue you whether or not it is inside a company or in your own name.

As a rule of thumb, if you have more than three employees I would hold my properties inside a company. But I would never hold a property inside my operating business. It complicates a possible sale of that business and clouds your holdings.