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Updated almost 11 years ago,
'Flipping' 25+ per year. Best entity structure?
Current business snapshot:
-Currently buy/renovate/sell 25+ SFR per year.
-Avg hold time from purchase to sale is 3 months (no property ever held longer than 4 months)
-Hold approx 6 properties at any given time per 3 months.
-All properties are 'Free & Clear'
-Only one owner involved (no partners or outside funds)
-Considering entity solution of Multiple LLCs under S Corp Holding company.
Would greatly appreciate feedback on ideas for a business entity structure. An attorney and I discussed a structure of an S Corp that holds liquid funds and then two 'disregarded' LLC entities that actually hold the properties. 'Disregarded' meaning that the two LLCs will not have tax IDs and the profits will roll up to the S Corp for taxation on the aggregated profits. The purpose of two LLCs is to reduce the risk of total loss from any potential lawsuit by spreading housing assets among more than one LLC. The purpose of the S Corp holding company is to be a centralized entity for the business capital (LLC can transfer cash here when not in use thereby reducing LLC value as lawsuit target) and S Corp assists in reduction of S/E tax. The entities would also be covered by business umbrella policies and all properties would have individual property insurance.
I am trying to determine if this suggested structure is too complex/overkill or if it is the most suitable. Would it be more practical to have just one LLC electing to be taxed as an S Corp? Or some other structure?
Thank you for your feedback