LLC

[Patty Harris]

I am a newbie to BP and just in time! I have declared 2015 as the year I begin investing in RE. I have wanted to break into the field for over 10 years but felt completely unequipped. I didn't know how or where to start. Thanks to BP, I am becoming more knowledgeable about the subject by spending 1-2 hrs/day just reading the BP blogs and informative articles. I follow the links to more links..................

I would like some feedback about LLCs such as when should I set one up, should I set one up, what state should I file my LLC?

Thanks to everyone!

[Brandon Hall]

@Patty Harris This is a forum and you should not devise a strategy around the advice you receive here as it may be wrong. You should however use it as a tool to generate questions to the professional you are going to be hiring (hopefully). 

Should you set up a LLC? It depends. What benefits do you think a LLC will yield for you? What real estate activities are you going to be involved in? Do you have significant assets you are trying to protect? Have you considered obtaining a solid insurance policy instead?

@Sky Mikesell While I love BP because people are always helping other people, if you don't know what you are talking about, keep it vague. For instance, flipping in a LLC is actually a horrible idea. Self Employment taxes will eat away at any profit Patty makes. It is generally recommended that flips be conducted in a S-Corp instead. You should have said "I think its a good idea to have an entity" without actually naming the entity type. 

Additionally, being a doctor has very little to do with it. "Significant assets" is what you should have said. Someone could inherit a million dollars and work as a janitor. If they read your advice, they wouldn't set up an entity and their $1MM would be at risk.