Short and Long Term Real Estate Entities

Main Entities for Short and Long Term Real Estate Strategies

There are about 13 REAL Estate Investing Strategies

Real Estate Cash "Short Term" Strategies: 1) Bird dogging (Finding property on behalf of another investor), 2) quick flipping houses, (wholesaling), 3) lease options, and 4)"Sandwich" Lease options,.

Real Estate Equity "Short or Long Term" Strategies: 5) foreclosures, bank foreclosed real estate (REOs), either 6) short sales, and 7) taking title "subject to" the existing mortgage

Real Estate Advanced "Long Term" Strategies: 8) Commercial real estate such as apartment buildings, Office space, mobile homes, etc, 9) Rehabbing, 10) Landlording

Other Real Estate Strategies: 11) Discounted mortgages, trust deeds, and other "paper", 12) Tax Liens, 13) Land Investing

A "short term" cash strategy is worried about self employment taxes and therefore needs to choose an entity structure that will reduce S.E. taxes. With this strategy, you are exposed to self employment taxes, federal taxes, and state taxes

A "long term" equity strategy is worried about passive loss rules and being able to take real estate losses against active income. Also Long term is also concerned with when to start deductions. It is not necessarily in the year that the expenses occurred.

An advanced or other strategies (can be short term or long term) could be worried about a combination of self employment taxes as well as taking passive losses.

If you don't plan accordingly for your investing goals and choose the correct entity structure, the taxes will definitely hurt your bottom line in a big way. As a real estate investor you need to stay updated on which entities are on the IRS hit list.

Generally speaking, the LLC is the ideal entity to start your real estate investing with. If you decide to hold on to the property, stay with the LLC. If you flip or rehab and flip you will want something with S Corp tax treatment. So either elect S Corp for your LLC or start a new company. 

 Learn  more about Entity Structuring HERE