Structuring a company

[Nick S.]

Hello all, 

I currently own a 5-unit, and two single family homes, and have my real estate license. I just got approval for funding that will allow me to purchase 8 single family homes, and generating about 9k in income per month on top of what I already own. I just have a few questions for structuring everything. 

I will hold the properties in an LLC that I own, but I want to start an S-Corp since other members of my family also own real estate. The goal would be to have the S-corp manage the properties, and we can all receive salaries out of the profit that the properties produce. This will then allow us to get more loans, and continue to build the entire portfolio.

Is this the correct move? What have others done in this situation that was successful? Are there other benefits of an S-Corp that I am missing? 

My 5-7 year goal is to buy enough real estate to generate 1M+ a year in gross income, and allow us all to have salaries as employees of the S-corp. 

Thanks for your help!

Nick

[Steve Vaughan]

I have an s-corp that manages my properties, some of which are in an LLC. The idea of taking passive real estate income and turning it into self-employment salaried income doesn't sound right. Ludicrous, actually. It's all pass-through anyway, but now you've taken that wonderful 'passive income' and stuck into self-employment with all those wonderful taxes like fica/ss and medicare. Gotta ask a tax guy, but that's my first thought. Increasing taxable wages at high a$% tax rates just to show a bank so you can get more loans? Not me, no way. Good question, though! Curious to see what others say on this...