All Forum Posts by: Dustin Paschal

Quote from @John Underwood:

Quote from @Dustin Paschal:

Quote from @John Underwood:

I have a Wyoming LLC holding a land trust.

The more attorneys I talk to, I feel the Wyoming LLC is overkill.

I do have a Family Trust that owns a Master LLC that owns multiple LLC'S that own properties.

Hey John, 
Thanks for responding.
Your entity structure sounds similar to what I am looking for. I think overkill is fine "better safe than sorry" kind of thing. 

I have some follow up questions for you:
Do you operate both short term and long term properties?
Do you self manage or provide any other services to your Master or Property-owning LLCs? 

Yes I have both STR & LTR. I mainly only have the paid off houses (most of them) in LLC's as the mortgage provides a degree of protection.

I self manage all but one property.

Do you wholly-own the STR & LTR and just manage out of the property ownership LLCs? 
I unfortunately do not own a majority of the equity in the LLCs that own the property and would like to charge a management fee to the jointly-owned LLC to get more out return of my sweat equity, instead of that return being split between owners based on capital investment. 

Quote from @John Underwood:

I have a Wyoming LLC holding a land trust.

The more attorneys I talk to, I feel the Wyoming LLC is overkill.

I do have a Family Trust that owns a Master LLC that owns multiple LLC'S that own properties.

Hey John, 
Thanks for responding.
Your entity structure sounds similar to what I am looking for. I think overkill is fine "better safe than sorry" kind of thing. 

I have some follow up questions for you:
Do you operate both short term and long term properties?
Do you self manage or provide any other services to your Master or Property-owning LLCs? 

I have 5 questions, please read post in full for context before answering and indicate which question(s) you are responding.

I have a non-majority share of equity in a few real estate industry LLCs located in multiple states. Currently each property is a single family home functioning as Short Term Rentals (STRs) but I plan to diversify into LTR, multifamily, and commercial ventures in the future and would like the structure discussed here to serve that eventual landscape.

Level 1: An LLC formed in the state of the property for each investment.

Level 2A: An Ownership Wyoming LLC holding company for all the equity of the multiple LLCs at Level 1
Level 2B: A Management entity to facilitate legal/tax/bookkeeping/day-to-day ops/etc. for each Level 1 entity (goal to leverage economies of scale against overhead cost of local third-party contractors, vendors, software subscriptions, etc.)

Level 3: Myself

I feel with the layers described and proper legal & accounting I's dotted and T's crossed, there is a sufficiently thick corporate veil and there will be appropriate insurance for each entity to further protect from loss. Thus, I'm seeking primarily answers from a tax perspective of your respective experience.

Tax Questions:
Level 2A)

1. Should there be multiple Wyoming LLC holding companies based around each business model? (ie: separate the holdings based on type of business operated at level 1 entities, one holding co for all short term activity residential, another for long term residential, another for commercial)

2. Anything else I should know before consolidating my equity in this structure instead of in my name?

Level 2B) Assume that I will have equity in each entity management services will be provided to = related party (I believe that may matter for tax purposes and active/passive treatment of revenues) - possible expansion as a third party management company would occur years later.

1. What type of entity would present the best tax effect from receiving revenue from passive and active activities at Level 1? LLC w/ S-Corp election? plain LLC? C-Corp? Other?

2. Where should this entity be located? My state of residence? Wyoming as with 2A entity? Is there a state with particular benefits for management companies?

3. Anything else I may not have considered before embarking on this endeavor?

Thank you in advance to all whom contribute to this discussion, I plan to take my conclusions from this thread to a legal and tax professionals before doing too much, just seeking wisdom of experience from others and to efficiently use those professionals' time.

I have 5 questions, please read post in full for context before answering and indicate which question(s) you are responding. 

I have a non-majority share of equity in a few real estate industry LLCs located in multiple states. Currently each property is a single family home functioning as Short Term Rentals (STRs) but I plan to diversify into LTR, multifamily, and commercial ventures in the future and would like the structure discussed here to serve that eventual landscape. 

Level 1: An LLC formed in the state of the property for each investment.

Level 2A: An Ownership Wyoming LLC holding company for all the equity of the multiple LLCs at Level 1
Level 2B: A Management entity to facilitate legal/tax/bookkeeping/day-to-day ops/etc. for each Level 1 entity (goal to leverage economies of scale against overhead cost of local third-party contractors, vendors, software subscriptions, etc.)

Level 3: Myself

I feel with the layers described and proper legal & accounting I's dotted and T's crossed, there is a sufficiently thick corporate veil and there will be appropriate insurance for each entity to further protect from loss. Thus, I'm seeking primarily answers from a tax perspective of your respective experience. 

Tax Questions:
Level 2A) 

1. Should there be multiple Wyoming LLC holding companies based around each business model? (ie: separate the holdings based on type of business operated at level 1 entities, one holding co for all short term activity residential, another for long term residential, another for commercial)

2. Anything else I should know before consolidating my equity in this structure instead of in my name? 

Level 2B) Assume that I will have equity in each entity management services will be provided to = related party (I believe that may matter for tax purposes and active/passive treatment of revenues) - possible expansion as a third party management company would occur years later.

1. What type of entity would present the best tax effect from receiving revenue from passive and active activities at Level 1? LLC w/ S-Corp election? plain LLC? C-Corp? Other?

2. Where should this entity be located? My state of residence? Wyoming as with 2A entity? Is there a state with particular benefits for management companies?

3. Anything else I may not have considered before embarking on this endeavor? 

Thank you in advance to all whom contribute to this discussion, I plan to take my conclusions from this thread to a legal and tax professionals before doing too much, just seeking wisdom of experience from others and to efficiently use those professionals' time.