Which entity and why?

[Ben Parks]

I am trying to set up my investor company. My plan is to buy off market deals, either rehab and rent, or flip. I was set on an LLC. But after more reading, some have suggested an S-Corp for flipping and then individual LLCs for each rental. Any advice or guidance here? I'm in Texas.

[Greg Scott]

FWIW, I'm not a lawyer.

Flipping is an active business. While I've flipped a couple houses, I've never done it a full-time job.  My understanding is that an S-Corp has attributes more favorable to an active business.

Most people hold properties in LLCs because it is a passive activity the paperwork is easier to manage. Personally, I found it advantageous to NOT use LLCs for a variety of reasons. (I held single family properties in my name.) Having one LLC for each property seems overkill. It adds a lot of cost and structure that must be properly maintained. If you don't maintain the LLCs correctly, you might as well not have them, because they will be disregarded in a lawsuit.