LLC vs corporation vs individual buyer

[Talha K.]

Hi BP community,

I have been going over the different forums here trying to get the hang of breaking ground on REI. We just opened escrow on an income property in Los Angeles and wanted to get everyone's opinion/input. It's a 4 unit rental property solely for income with 25% down and has a monthly gross income (after paying Taxes, P&I, and insurance) would be 800/month. We (me and my wife) already pay a lot of income tax due to relatively higher income bracket, since we do have full time jobs; I wanted to find out if it's good idea to form an LLC to help with saving on taxes vs forming a corporation vs leaving it the way it is? We don't really have any other assets so will most likely not need any protection on that front. We are using a real estate manager who will be paid a portion of the total rent collected as well as a handyman who will be paid per service episodes. Any input will be greatly appreciated.

Thanks

[Brie Schmidt]

@Talha K. - Well it depends on what type of loan you are getting. If your loan is through a residential mortgage broker and you used your personal income to qualify then you have to buy the house and hold title in your personal name. You can always form a LLC/Corp later and transfer ownership to it but understand that it could trigger the "due on sale" clause

As far as a LLC vs a corp the vast majority of investors I talk to do a LLC. I have a LLC because I did not want to be subject to the double taxation of a Corp. This link explains the different tax benefits and reasons for choosing an entity

http://www.mycorporation.com/learningcenter/corpor...