Business Entity Advice - Who am I looking for?

Question

Hey guys,

I'm still in the studying and research phase of learning real estate and right now and I'm kind of stuck on the business entities side of things. I have read several things that suggest treating your investments like a business, which I agree with. But I have looked up on the forums about structuring LLC's around properties and there seem to be very mixed reviews about using business entities at all.

So, my question is who is the appropriate professional to seek for advice on this? RE Attorney, CPA, RE Tax Specialist, Wealth Adviser, other RE Investor...?

And if you want to throw your 2 cents in on the subject feel free, I'd love the feedback :)

Thanks!

Terry Hershberger · Answer

Chris,

I am mainly a buy and hold investor. As a few investors above, I get my advise on this subject from my CPA who is also a RE investor and her husband is an attorney. She recommends to just get enough insurance that makes you comfortable. It is cheaper than creating all these different entities and then paying her to do all the returns.

I focused my time instead on finding qualified sellers to get offers to and then closing the deals. I also work on educating myself more and more on my market, sharpening my negotiating skills, and building relationships. If you don't do these things effectively, there will be no need for any entity as their will be no business.

Hope this helps! Happy Investing!

Steven Hamilton II · Answer

Chris,

Insurance is most important to consider as most lawsuits are settled for the insurance amount.

LLCs are great but they don't protect you personally from your own negligence.

Steven Hamilton II · Answer

Your accountant and an Attorney are most important for this discussion.  They should both be factoring in your future plans when planning for you.

Chris Duzan · Answer

@Ellis San Jose

Thanks, I guess I have that same problem. Because I'm definitely stuck on the idea that I need to create an LLC around each property. So insurance is enough to protect me?

Account Closed

Thanks

Paul Timmins · Answer

@Chris Duzan

A buddy has 130 beds brings in 71K mo after expenses 50K. She basically works 2 months a year, has a system to reconcile 130 rents every month in 5 minutes. She has strong contracts and has the parents guarantee.

Paul

Paul Timmins · Answer

@Chris Duzan

Welcome. Take a good look at student housing. A CPA is your best bet you can also discuss tax strategies good team member. Amanda Han writes a blog on BP.  Fill in the foundation below.

Check out the Start Here page http://www.biggerpockets.com/starthere

Check out BiggerPockets Ultimate Beginner's Guide - A fantastic free book that walks through many of the key topics of real estate investing.

Check out the free BiggerPockets Podcast - A weekly podcast with interviews and a ton of great advice. And you get the benefit of having over 70 past ones to catch up on.

Locate and attend 3 different local REIA club meetings great place to meet people gather resources and info. Here you will meet wholesalers who provide deals and rehabbers.

Two Great reads, I bought both J. Scott The Book on Flipping Houses,The Book on Estimating ReHab Costshttp://www.biggerpockets.com/flippingbook

Consider checking out HUD homes for small multi's owner occupied gets first crack.

You might consider Niche or Specialized Housing like student housing. Rents can be 2-4 times more. Remember you don't have to own a property to control it.

Download BP’s newest book here some good due diligence in Chapter 10. Real Estate Rewind Starting over

http://www.biggerpockets.com/files/user/brandonatbp/file/real-estate-rewind-a-biggerpockets-community-book

Good Luck

Paul

Chris Duzan · Answer

Thanks everybody for all the tips and suggestions! I will definitely stop trying to worry about this stuff by myself and use a good CPA and attorney. Time to get back to studying the important stuff.

@Paul Timmins

I would love to talk to your buddy you were speaking of. Is she on BP?

Ellis San Jose · Answer

@Chris Duzan

Chris Davis made an excellent point in not placing too much emphasis on entities & just get the proper amount of insurance.

A common newbie mistakes is to allocate way too much time & mental energy on entities & other distractions. They will insist that they need to understand all the in's & outs of the alphabet soup of S corp, C Corp, LLC, etc. etc.

The highest & best use of your time IMHO is to focus on the following activities:

1) Talk to qualified sellers

2) Make offers

3) Close Deals

4) Sharpen your deal making skills

5) Improve marketing to talk to more qualified sellers.

Pattie Thomas · Answer

https://www.legalzoom.com/attorneys-lawyers/legal-...

Here you go! :)

Pattie Thomas · Answer

Yes you have it correct.  You can select who you want and I called to do a mini interview first to see if the attorney was the correct one for real estate for my specific needs.  Now for a tax person, Corporate Tax Network helped me to complete my business entity.  I covered both sides to my entity because you have to have a good attorney and tax person who know real estate, and as your business grows your needs will also too.  I hope this is helpful.

Legal Zoom will answer all the questions that you have and for 30 days you have access to both the attorney and tax consultant to ask questions and help complete any documents that you may have.

pt@7trumpetproperties.com

Business Entity Advice - Who am I looking for?

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