Do I need a Website, and S-corp or LLC to start buying houses???

[Vee Vu]

Hi everyone, I'm a newbie in real estate investment. I'm learning a few courses about flipping houses now. My goal is to get my first deal in the next 5 months. I feel overwhelmed because there are so many things need to done before I can get start with a professional look and high credibility. Can anyone share your beginning story with me and the community? And do I need a Website, and S-corp or LLC to start buying houses?

[David Dachtera]

@Vee Vu,

I'm going to say, "It depends".

If you acquire income producing assets, do you intend to keep that income? ... or risk losing it and your properties - AND personal assets/possessions -  in litigation?

Do you enjoy paying more taxes than you need to?

Remember also, that if an "umbrella policy" has to pay out it means litigation was brought and you lost. Your personal assets are now exposed and at risk.

You'd do better to establish your business entity structure beforehand. Then, you don't have to think later about deeding a property from your own name into an entity's name and possibly triggering Due on Sale.

Your goal should be "Control everything, own nothing". You control the business entity structure, but you personally do not own it. It is owned by a trust you establish with yourself as the beneficiary and build entities from there. Start with an S-Corp and the first LLC. Acquire the first property into the LLC and build from there - it is never owned by you personally. You receive income through the S-Corp using the salary/dividend split: use a 1-to-2 ratio: 1/3 salary, 2/3 dividend. This limits your self-employment tax liability - the dividend portion is taxed as regular income.

A lot of folks will argue against all that based on costs and management effort. Again, it depends on your goals. Do you want to be in the REI business or just do it as a hobby? Do you want your income properties to endanger your personal assets and possessions including your family's home and savings? ... or keep everything separate and out of reach (as much as that's possible)?

Your choice, really.