All Forum Posts by: Greg Boots

Chris,

If you wholesale in your own name or even an LLC that is not taxed as corporation you run the very real risk of getting classified as a dealer by the IRS. You should use a corporation for all transactions where the holding period is less than 12 months.

Unless the trust is irrevocable you will not have any asset protection. The property should be placed in an LLC. If you are concerned about the lender triggering the due on sale clause use a grantor trust to assign your beneficial to your LLC. However, if you are investing in PA you are going to get tagged a transfer tax by placing the property in any trust, other than a living trust, if you close on the property in your own name.

Brandon,

The transfer of the corporation to the LLC would be treated as a capital contribution and thus a non-taxable event. However, the corporation would have to be a "C" corporation since LLCs are not permissable shareholders in an "S" corporation.

I understand the gist of the strategy but I would be very reluctant to suggest its use. If you hold long term property in a "C" corporation you are losing the benefit of generating passive income from your rentals.

Greg

Rick,

I would use one LLC or even a corporation as the manager of the other LLCs that hold the rentals. The LLCs that are formed for the rental properties would be structured as Manager Managed LLCs.

All of your contracts, marketing, business cards, etc. would be in the name of the management LLC/Corp. The names of the LLCs that actually hold the properties will then become irrelevant since the real business activities will occur from the management company. I once had a client walk through a parking lot and name his 15 LLCs after the brands of cars in the lot.