Updated almost 3 years ago on . Most recent reply
Would I need an LLC for this situation?
I have been in contact with someone who is a close friend of mine who has agreed to help me get started in RE fixing and flipping. Long story short, I would be giving them a percentage, (25-50%), of the down payment of the home. Once the home has been renovated and sold, I would then receive the same percentage of the profit. Is this strategy typical in RE? -(sounds a little too good to be true) - Should I think about creating an LLC/S Corp if basically all I would be doing is putting up money for deals and taking percentage of the profits?
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I think you need to do a bit more research my friend, you are leaving out a lot of details. A lot of flips lose money because it is a risky business. Taxes are high (capital gains) & Profits are not easy to come by. When you sell, 6% of the value of the property evaporates just in closing costs. Something always comes up. It takes longer than planned. Sometimes contractors don't show for weeks (or ever) and you lose a lot of time and money.
Percentages are deceiving, I can give you 75% of the deal and if it's a loss, you owe me money. ;-)
Do the first one with someone who knows what they are doing, figure out the processes, costs, timing, then you can figure out profits and percentages.
Percentages are deceiving, I can give you 75% of the deal and if it's a loss, you owe me money. ;-)
Do the first one with someone who knows what they are doing, figure out the processes, costs, timing, then you can figure out profits and percentages.