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Updated almost 4 years ago on . Most recent reply
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Buy some rentals to bolster unrelated seasonal business?
Hi BP! I own and operate a seasonal business selling Christmas trees in Manhattan (hit me up if you want to hear more about that adventure!) and am wondering about buying oos rentals within my Christmas tree LLC. What are the pros and cons here? I'm thinking it'd be nice to have income during the year to support the large upfront purchase of trees in November and it might lend credibility to us in the eyes of lenders (for future expansion). What are your thoughts? Effective? Tax implications?
About me. I have a couple of rentals in Oklahoma City that are going well and I'm currently flipping a house and doing a new build both in Indianapolis... So I don't have zero experience... but also I'm still newish.
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@Forrest Faulconer Yes! That's kinda of what I'm thinking too. Also this way I can roll profits into other investments rather than A: Letting it sit there all year or B: taking the distribution on the cash to use in my personal investments (what I did this year).
@Ben Scott Thanks for that input. My current rentals are just in my name and I have an umbrella policy for protection bc California LLC's are bonkers, don't add that much protection and are cost prohibitive.
@Alyssa Dyer Astute as always. Ultimately I would like to expand the Christmas tree business far beyond what it is...and I AM doing that! What I will need in the future will be funding and loans and showing NO income for 11 months out of the year then $250k (gross) in December just feels untrustworthy to banks...even though I've done it for 10 years now. *Roll-Eyes-Emoji*. Thanks for sharing your experience. Makes sense to separate it later down the line once they take on 'lives' of their own.
@Greg Schuricht Thanks for your input! I was planning to take title in my LLC, yes. My intent is to grow my business to the point where it can snowball itself with different streams of income. December is a huge month but we have expenses year round that the rental income can take care of. We are also going to need loans in the future and I'm looking at it as a play to make us more credit-worthy.
re: your last sentence. I did that this year and am currently flipping a house and doing a new build with the proceeds all within a separate LLC.