Forming an LLC in Rhode Island, advice and best practices

[Luis Barrios]

Hi all,

I will be creating an LLC in the next few days and will be filling in the state of Rhode Island. I've been in contact with an attorney and a few accountants as how they recommend I file, but wanted to ask seasoned investors on the forums.

My wife and I currently own a 2-family home with a short term rental which generates quite a bit of cash flow month-to-month, and it is getting to the point where we need to separate our personal finances from the rental's, and, we also want to protect our personal assets from liability and take advantage of any tax benefits. Also, we will be purchasing a 2nd home in the next few months and will turn that into a short term rental as well. 

So far, I plan to create an LLC in Rhode Island, open a business account and a business line of credit, have all the earning and bills from the short term rentals go into said account, and have the LLC sign a lease on each of our properties (which my wife and I will own under our name) and then transfer the earning after expenses from the LLC over to our personal bank account. My reasoning for having the LLC sign a lease on each property is, 1) for refinancing or getting a new loan, our mortgage person said it looks better on paper to have rental income coming in from a lease than a "short-term rental", and 2) the rent that the LLC will be paying us is tax deductible as a business expense (for the LLC) when we file at the end of the year.

Eventually we will be buying and flipping some properties (will create a different LLC for that) and buy and hold a few. So, I was also told not to purchase a property using my LLC as my wife and I have enough financial history to qualify for a conventional loan or a refinance and the LLC won't (I assume this mostly applies to buy and holds and refinancing as with flipping we will not be looking to refinance or go conventional).

Most of the advice I have gotten about how to have our LLC taxed is to simply have it taxed as an LLC and file our taxes together. However, I was also thinking of paying myself from some of the earnings as a 1099 employee simply so I would only have to pay self-employment tax on what I pay myself and not all the earnings, so filling taxes as an S-corp.

Can some experienced investors advice on my plan?

Is there any flaws i my logic?

Also, are there any benefits on filling my LLC with an attorney or by myself (which I was planning)?

Any advice or personal experience will help!