LLC vs. Corporation, what is better as an investor?

[Jose Corbera]

Hi All,

When establishing a LLC or a Corporation to either buy and hold properties or wholesale properties, what legal concerns should I take into consideration when forming either of the two? I understand this may be an legal question but as experienced investors, what is your take on it and how has it worked out for you?

Thanks,

Jose Corbera

[Ron Trinh]

Owning real estate in a C-corp is not the best idea due to double taxation. The corporation would be taxed on the profits it makes from flipping and you, as a shareholder, would be taxed when you take a distribution from the corp. To avoid the double tax, an LLC may be your best bet.

Also, from my experience working in real estate tax as an accountant, most clients tend to adopt an LLC "tree" type strategy where they keep property in one LLC, and have it managed and owned by a separate LLC. From my understanding, this creates several "layers" of legal protection.

Not legal advice, but hope that clarifies a bit.