LP or LLC or sole proprietorship

[Frank Anselmo]

I have followed Garrett Suttons advice for starting a corporation out of state.  If you are not familiar with Garrett Sutton, he is one of Robert kiyosaki "Rich Dad" advisors  He advises everyone to start an out of state corporation, Nevada or Wyoming to avoid damaging lawsuits going after your assets.  Real Estate can greatly benefit from that. 

So my question is that I really don't want to fork over $900 to start an LLC or whatever because I don't have a partner and I am very, very new to Real Estate. Would it be important to hit the ground running and just start an LLC even though I don't have my feet wet? How did you guys start off?

[Perry Livingston]

I caveat everything I'm about to say with: I am not a CPA and it is advised that you speak with a  registered CPA and/or tax attorney preferably with experience in real estate before making any decisions like this.

My business partner and I started off with a layered LLC structure. Our attorney/CPA advised us to have our holding company based in Delaware (which is where we the managers reside in the structure). From a subsidiary perspective, we decided that each state we invest in gets its own "local" LLC. So if for example, we buy property in NY, it is held in a New York-based LLC. So that way, if someone decides to sue, not only are we protected by the way we layered the businesses, but the impact on our overall portfolio becomes much less severe and is isolated to a single subsidiary.

Again, this is a decision that worked best for us when consulting with our tax attorney but it doesn't work for everyone. There were a lot of variables and scenarios we discussed that led us down this path. I hope this was helpful!