What form of business structure do you recommend for real estate investing?
Posted by admin on 30 Jul 2008 4:56 pm. Filed under Renting & Real Estate.
Chuck Z asked:
I’m an individual who will be buying rental properties, and buying properties that I will flip. I plan to hold each rental through a separate legal entitity (LLC) which will be owned by another legal (“parent, if you will) entity (LLC) to protect me and each property from the liabilities of the others.
I’m an individual who will be buying rental properties, and buying properties that I will flip. I plan to hold each rental through a separate legal entitity (LLC) which will be owned by another legal (“parent, if you will) entity (LLC) to protect me and each property from the liabilities of the others.
Is that the strategy you would recommend? LLC for each property with each LLC owned by a common LLC? Or would you suggest that the common company be an “S” Corp? If so, why?
Also, what about properties I’m flipping? Do you think they should also be held by an LLC?
Thanks!!!
On August 1st, 2008 at 4:41 pm
LLC is the best for sure. But do not mix private funds with LLC funds. Keep excellent books !!!!!!!!!!!!!!!! Do only one LLC or you get confused. Run all your business under this.
On August 2nd, 2008 at 9:26 pm
There are investment advisors who specialize in real estate investing. You might also consider contacting a specialist who does Real Estate Investment Trusts (REITs). They can advise you on how to do this properly. You might also ask them about a “1031 exchange”, which is a type of real estate transaction where you sell a rental property, only to reinvest the sales proceeds into another rental property.
On August 4th, 2008 at 4:39 pm
As a REALTOR, I would recomend only owning one LLC. As far as flipping houses…try to purchase houses that have been repoed. They tend to have alot of damage and you can usually get them pretty cheap. Find a REALTOR who specializes in selling repo property. Banks usually work in 30 day intervals…price is reduced every 30 days…so sometimes you can get a great deal…They would also be great for renting. You could fix them up and rent out…usually repo’s are not in so great neighborhoods and aren’t as easy to sell…so why not rent them out…make your money back…and when you do sell them…the value will have gone up!