Holding Company

[Karma Senge]

I just wanted to ask the BP community a question. I am about to form my LLC for my real estate investing company (primarily doing multi-family, commercial, MHP, etc.) and wanted to know if I should do one LLC for a holding company and then one for my real estate company? I know next to nothing about holding companies by the way. But I know that besides REI, I am also doing market trading and thought I should put that company and the real estate company all under a holding company. AND if I am going to do that, should I create the holding company before I create my rei company?

Thoughts?

[Ned Carey]

Don't complicate you life. Why do you want a holding company?

It is a good idea to have separate companies for different businesses. Stock trading or a retail store for example should probably be in a separate entity from you real estate holdings. If you rehab and flip it is probably a good idea to separate that from buy and hold. (IRS "Dealer" issue)

When you have a large portfolio of real estate you may want it break it up into separate companies. Any very large properties like a large multi unit should probably be in it's own company.

Obviously talk to a tax and lefgal professional to get advice for you specific situation.