S Corp vs LLC for flips

[Lauryn Meadows]

Hey all! I'm wanting to get into multi families but I need some capital to do that. My thought is to do flips to fund multi families in the future.

Do you guys suggest an LLC or a S Corp for house flipping? Should I set this up before my first flip? Also, do you guys prefer LLC for buy and holds? Can I have an LLC for rental properties and a S Corp for flips or is that going to complicate my taxes? My husband and I will be going in as partners in whatever entity is appropriate.

[Brandon Sturgill]

@Lauryn Meadows S Corp is a good thought down that road when you get your business established, but not for flipping or holding properties. An LLC is the desired way to do a multitude of things...including flipping houses, holding properties, or setting up joint ventures...and they are $99 to start right now. I buy in my LLC at this point for anything seller financed...the problem with institutional lenders is that they won't lend to an LLC...or re-finance to an LLC. So, if you plan to use institutional money, you need to acquire property in your name and then transfer title to your LLC at some juncture down the road...the only caution here is that you need to draft a deed (use a lawyer)...to transfer title, which triggers the acceleration clause (due on sale) in your mortgage. Very unlikely this will happen, but the risk is always there.

Some other thoughts are to consider an umbrella insurance policy (or rider) if you are worried about risk...but this does not limit your liability. Keep me posted if you have follow-up questions.

Good luck!