Can somebody help with this confusing question....

[Teresa Miller]

Hello, question... When you purchase a property is it purchased as an LLC or stated another way , is each property its own LLC? Also, When you're acuring a deal, as a flip, do you acquire all under your S corp company?

I'm new at this so forgive me if I seem confused! 😁

Thanks a bunch!

[Mary B.]

Some good advice has been given here. You should take the time to do some research on entity types particularly a comparison of LLC versus Corporation(S corp). Specifically look at the state by laws regarding both an LLC {which can be a single-member LLC aka disregarded entity; a multi-member LLC aka LLP or a LLC Corporation} and a small business corporation. Yes you can be both so research that as well. You will have certain responsibilities with the state you are in / doing business in as well as federal responsibilities [filing requirements to get set up such as the selection of entity classification should you choose not to be a disregarded entity and go for LLP or LLC S-Corp as well as annual tax returns]. Then of course there are Trusts, various types too. It gets mind boggling. Though as a newb you might not want to get involved with trusts yet.

Kudos,

Mary 

[Sydni Chattman]

Originally posted by @Ravi P.:

call up legal zoom and they'll set you up with an LLC, but you don't need one until you get that 5th investment property. until then just get homeowners insurance

Why your 5th property? I am still new to this industry and have been wondering if I need to set n LLC or not. I've gotten advice to not worry about getting an LLC just yet, but still don't understand why not.

-Sydni

[Nicole A.]

@Sydni Chattman I'm guessing the person that said that had this experience but it doesn't mean it's true across the board. I've also heard others say they can't go past 10 properties in a LLC. In the end, while you might have to change your strategies of acquiring properties, such as using different banks, buying some with cash, etc...you can put as many properties as you want and are able into the LLC.

It's all about your abilities, your risk management, and your preferences.

Creating an LLC is also your preference. Just weigh your options. You can own your properties in your own name and be just fine. The key is to do everything legally and run your business properly and have good insurance. Some people for some reason want to try to hide their identity to others and think a LLC can do that. If you have a LLC, and it's run properly and you're not mixing your personal money with your LLC's money, it separates your personal assets from what your LLC owns. So if someone sues your LLC, and they win, they could essentially only go after the LLC's assets. They shouldn't be able to go after your personal home, for instance.

But you'll be running everything properly and legally--LLC or no LLC--so no one should be able to win a lawsuit against you for the most part. ;-)

[Sydni Chattman]

Originally posted by @Nicole A.:

@Sydni Chattman I'm guessing the person that said that had this experience but it doesn't mean it's true across the board. I've also heard others say they can't go past 10 properties in a LLC. In the end, while you might have to change your strategies of acquiring properties, such as using different banks, buying some with cash, etc...you can put as many properties as you want and are able into the LLC.

It's all about your abilities, your risk management, and your preferences.

Creating an LLC is also your preference. Just weigh your options. You can own your properties in your own name and be just fine. The key is to do everything legally and run your business properly and have good insurance. Some people for some reason want to try to hide their identity to others and think a LLC can do that. If you have a LLC, and it's run properly and you're not mixing your personal money with your LLC's money, it separates your personal assets from what your LLC owns. So if someone sues your LLC, and they win, they could essentially only go after the LLC's assets. They shouldn't be able to go after your personal home, for instance.

But you'll be running everything properly and legally--LLC or no LLC--so no one should be able to win a lawsuit against you for the most part. ;-)

 Wow,

I see! That's great information! When doing business under my own name, what are the proper steps to take? Or an LLC (which is what I'm thinking of doing) in others words, how do I get started?

-Sydni

[Robert Adams]

Lots of good info on this thread...

Long story short whether you have 1 property or 10 the goal of an LLC and S Corp is to protect your personal assets as well as pay as little taxes as possible.

You have to off set some of the tax savings with the cost of setting up the LLC/S Corp as well as maintaining it (annual fees and separate filings for taxes etc).

If your net worth is low the fees may make it not worth doing. If you have a high net worth and only 1 property it will still be worth it to further protect your other assets.

So with everything that has been posted the take away should be this "Everyone's situation is different. You should seek legal counsel as well are advice from your CPA. Between the 3 of you, you should be able to weigh your options and come up with a solid plan. Then implement the plan."

Best of luck!