To LLC Or Not To LLC ?
Hello everyone, I am a newbie REI with a few questions. I had a great game plan, and have done a lot of research and have been very motivated to get the ball rolling. Yesterday, before setting up my LLC with my attorney. I met with a really good RE Agent who owns properties herself and I was shocked to hear what she was telling me. She burst my bubble and everything i was trying to do. I'm concentrating on distressed properties, rehabbing them and putting them back on the Market to sell. She tried telling me that I didn't need to set up an LLC in my position is this true?? I thought there were a lot of beneifts to an LLC, holding properties and deductions is this true. Can someone experienced please fill this newbie in.. Thank You
she is correct...but not all the way.
you should set up an S-Corp.
Talk with a Real Estate Attorney or Accountant so they can help you structure your business correctly.
My understanding is that an LLC is simply for your protection from liability. This is only value added if you have tenants. Lets say someone falls and cracks their head open, with a LLC you arent personally liable, and only the properties held by that LLC can be taken in the case of a large court judgment. I have worked with a lady that owns about 20 or so SFR and she has about 4-6 properties in an LLC. That way, one incident wouldnt wipe out your entire portfolio.
Ryan
Im not a lawyer, and this isnt legal advice, simply my opinion.
http://www.realestatetaxlaw.com/articles/entity.php