Flipping Property Inside of Property Management Company

Flipping Property Inside of Property Management Company

Pierre E.Pro Member
Washington, DC · Member since 2016 · 129 posts · 42 votes

If I have a property management company that manages all my rentals, and a separate holding company that holds all my buy and hold properties as my main form of investing, if I find a property that I want to purchase and either eventually decide to flip, or know I want to flip it from the beginning, are there any things I should consider in doing it within my property management company LLC or should I have a separate LLC for flipping properties?

The idea is flipping or assigning properties that I come across that might not fit my buy and hold buy box estimating 1-4  a year. 

Once I know I want to keep a property I am assuming keeping it inside my holding company is what would make the most sense. Just not sure about flipping.  Thanks in advance for your thoughts and ideas.  My goal is not actual legal advice just general things to consider.                                                                                                                                          

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Michael SmytheBusiness Member
Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
2y

Put each flip in its own LLC.

You could do them all in a single LLC for all your flips, but then you're stacking liability for all previous transactions in the same LLC, exposing whatever that LLC holds at the time of a lawsuit.

Lawsuits could come from buyers, contractors, lenders, etc.

Logical Property Management4.9454 Reviews
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  • Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
    2y
    Quote from @Pierre E.:

    If I have a property management company that manages all my rentals, and a separate holding company that holds all my buy and hold properties as my main form of investing, if I find a property that I want to purchase and either eventually decide to flip, or know I want to flip it from the beginning, are there any things I should consider in doing it within my property management company LLC or should I have a separate LLC for flipping properties?

    The idea is flipping or assigning properties that I come across that might not fit my buy and hold buy box estimating 1-4  a year. 

    Once I know I want to keep a property I am assuming keeping it inside my holding company is what would make the most sense. Just not sure about flipping.  Thanks in advance for your thoughts and ideas.  My goal is not actual legal advice just general things to consider.                                                                                                                                          


     No, when and if you want to sell it, just tell PM co there will be a change of ownership, 

  • Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
    2y

    Does the property management LLC have any assets to lose if it gets sued over something going wrong at the flip? Are these all disregarded LLC's where you'd probably be sued personally anyway? If you're already experienced at setting up LLC's I'd probably set up another one. (This is being said by someone that went with an umbrella insurance company and zero LL'C's, so take it for what it's worth.)

  • Michael SmytheBusiness Member
    Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
    2y

    Put each flip in its own LLC.

    You could do them all in a single LLC for all your flips, but then you're stacking liability for all previous transactions in the same LLC, exposing whatever that LLC holds at the time of a lawsuit.

    Lawsuits could come from buyers, contractors, lenders, etc.

    Logical Property Management4.9454 Reviews
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