One LLC, or one for rentals and one for flipping?

[Matt Motil]

I have searched for a while before posing this question, but couldn't find exactly what I was looking for.

I recently put my latest flipping project under contract and have been going back and forth on whether to keep and perform the flip under my current LLC (which has all my rentals) or start a new LLC for flipping. I'd like to hear the pro's and con's from the experienced BP nation on why I should or shouldn't do this. Our business plan is to ramp up the flipping for 2016 to do about 6 next year.

A few things that I have thought about already: 

Pros: 

Asset protection for my rentals during renovations and immediately after sale of flip. 

Separation of rental operations and flipping operations where LLC could get labeled a dealer and put future sales of long-term holds at risk for higher taxes

Cons: 

Multiple paperwork, maintenance fees, bank accounts, tax returns, accounting records for having multiple LLC's

I'm interested in the thoughts behind doing one way versus the other. 

[Account Closed]

@Cameron Skinner   

Thanks for sharing insite from your previous employment.  I am going to be making some changes to get me on the right path.  

What are there, like 400k members on this site.  I would think we would hear some personal testimony on the subject.   

There have to be a bunch of guys out there that have been audited.   Seems you never hear from them.  

For me the Tax savings is just not worth it.   Heck  I have already dump a bunch in already.   Why stop now, I'll need it soon enough.   

[Cameron Skinner]

@Account Closed mentioned field audits, the type that would tackle this issue, are extremely rare.  I wouldn't lose any sleep over it you relied on professional advice and didn't do anything wrong.  While we all agree your CPA made a mistake I don't think it rises to a level of malpractice.  CPAs are human they make mistakes that's why we carry errors and omissions insurance. 

Tax law has gotten so vast you need to find a specialist.  I suggest you find  a new licensed tax professional in your area that specializes in real estate and owns some investment real estate themselves. 

Good luck!

[Christian Sifuentes]

I just read through this discussion on LLC for Flips and rental properties. My questions is in forming an LLC is legal zoom a good way to get started? I am new to BP and hope to get started in a Flip in 2016. Thanks

[Matt Motil]

legal zoom is a good way to go if you don't have a good attorney you work with for other things. If you don't know what you are doing, they will help make sure you have all your bases covered. @Christian Sifuentes

Once you get setup I would recommend talking to a good real estate attorney and real estate minded CPA to make sure you are protecting your assets and money correctly. It's a small investment in the beginning that will pay off tremendously as you go 

[Christian Sifuentes]

Originally posted by @Matt Motil:

legal zoom is a good way to go if you don't have a good attorney you work with for other things. If you don't know what you are doing, they will help make sure you have all your bases covered. @Christian Sifuentes

Once you get setup I would recommend talking to a good real estate attorney and real estate minded CPA to make sure you are protecting your assets and money correctly. It's a small investment in the beginning that will pay off tremendously as you go 

 Thanks for the information Matt.