Most suitable form of ownership?

[Hector Trevino]

What is the best form of ownership for my real estate investment company? I.E. sole proprietor, S/C corp, LLC?

[Steven Hamilton II]

Originally posted by @Justin B.:

Originally posted by @Hector Trevino:

Extremely great reply Justin Thank You! LLC seems to be the way to go. Why not a C-Corp or Sub S though? Is there any thoughts on that?

Without going into too much detail, a C-corp is just too much time, effort, and money. Then if you aren't educated enough, double taxation can hit you among other things. Plus, I prefer not to deal with stock at this point in my investing. Not familiar with Sub S, but maybe you meant an S-corp? I didn't research S-corps in too much detail because we have 3 people. I did all this research back in 2007 when we formed the LLC and an LLC won hands down. After that, I didn't worry too much about the other entities nor do I have experience with them. I'm sure there are reasons to go with others, but in most cases, I think LLC's are your best bet starting out. They are easy, cheap, and provide great protection (when operated correctly).

Justin,

Be very careful not to give tax advice when/if you are not qualified to do so.

@Hector Trevino ,

NEVER hold real estate in a corporation. For flipping it is OK; however, NEVER hold real estate long term.

If you don't have a very high income, I Highly recommend that you consider going utilizing a C-corp. It will allow you to build a track record and it might put you in a position to distribute a good amount of income at lower tax rates AND you would. In some cases an S-corp may be more appropriate. It all depends upon facts and circumstances. Fact is though that it is highly recommended that you keep all rentals in disregarded entities.

You need to sit down with an accountant like myself who specializes in real estate. Feel free to ask if you have detailed questions but know that there are a LOT of factors involved.