All Forum Posts by: Philip Barr

Thank you for reaching out. Exciting to hear that you are embarking on a new chapter. That is a lot of great experience. As a fellow renter, I know what it is like to have a great living experience and relationship with a landlord. But I also know what tit is like to deal with mold and slow response times from management. So, you can be better and have great tenants because you put in the work to maintain your relationships and the properties. 

One area you may consider getting started in is wholesaling. Wholesaling involves identifying properties that would be good for flipping, renting, or just as general investments and then entering into a contract to close on them. Except, instead of closing, you assign the contract to an end buyer, and you essentially get a finder's fee for the property. Since you have experience in renting and knowing the potential of properties, this can be a great way to get your feet wet, build up some fees, and in due time, you may have enough to get some investment properties of your own instead of dealing them to an end buyer. Of course, some localities may restrict this process to some degree and circumstances may affect how you would go about this, but it can be a great option to start out with.

Note: This information is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication.

Hi! Welcome to the forums. I appreciate you introducing yourself. I don't have any opportunities to discuss with you, and you have a lot of experience in the trades that will serve you well, which I cannot comment on.

However, I do want to mention some common recommendations for flipping in legal structuring. Typically, it is best to do your flips in a structure with corporate taxation so you do not get hit with dealer status by the IRS. If you get labeled as dealer because you have done several flips, and thus the IRS looks at you selling properties as if they were inventory off of a shelf, you can lose valuable tax benefits like being able to participate in installment sales, 1031 exchanges, loss of capital gains rate on any property sales (all future sales treated as ordinary income, along with many other negative tax implications. It is better to set up an entity taxed as a C Corporation (whether traditional corporation or LLC) as the base for your flips so you don't get hit with dealer status. But the structuring typically doesn't end there since over a period of time you can build up quite a history in one business entity with all of these properties, and that increases the potential for liability from one or several of these properties to take down your base entity and ruin your other flips. Instead, it is better to have a subsidiary LLC owned by the C Corporation, and that subsidiary LLC would own the flip property. One LLC per flip, and once the sale funds are received and then distributed to the C Corporation owner, you would close the flip LLC and then move forward with a new flip LLC for each property. That is a great way to limit liabilities and also get some tax advantages available to the C Corporation.

Note: This information is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication.

I agree with many of the posts here, make sure to check with your locality about rules regarding STRs. Many counties and municipalities have come down hard against the STR industry recently, and some have outright banned it. The other thing is to ensure that the HOA, if there is one, allows for STRs as well. The worst thing is purchasing a great property and finding out that while the city and county allow STRs, the HOA does not. After finding a suitable place to purchase an STR property, it is important to protect yourself and your other assets from liability on that property. It should be owned in an LLC in TX, to limit the liability of the property so it does not spread to you or your other assets. If you get multiple properties in TX, you may consider a TX Series LLC since you can save on costs by owning each property in an individual cell under the parent LLC. If you want protection from outside liability for your assets, in other words, protection against personal liability, you would have the TX LLC or TX Series LLC owned by a WY Holding Company set up as an LLC in WY, which has significant protections against personal creditors. Of course, depending on personal circumstances, plans may change. This is just a basic example.

Note: This information is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication.

 I agree with @Brett Synicky here. While it is possible to partner with your retirement plan via a jointly owned LLC, it is laden with pitfalls if expenses and profits aren't handled just right. It can be a hotbed for prohibited transactions. I wouldn't recommend it until you have a lot of experience investing with your retirement plan and you have legal counsel to guide you in its establishment and maintenance.

Note: This information is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication.

I really appreciate your post and the insights provided. 

Location is important when looking for properties to rehab. When doing the rehab work and selling, it is also important to shield yourself from liability on the property. I often recommend setting up an LLC in the same state where the property is located to protect against that liability. Those LLCs should be connected to an entity with corporate taxation so that the IRS does not hit you with dealer status. Thing of course vary and are more nuanced when it comes to specific circumstances.



Note: This information is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication.

I don't have specific recommendations for providers, but once you find one that lets you invest in real estate and related transactions, it is important to use an LLC to hold real estate. That will compartmentalize the liability stemming from that property and protect your retirement funds and other assets. It is important to use funds from the retirement plan to pay for the setup of that LLC to avoid prohibited transactions.

Note: This information is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication.

These are great tips, thank you for the information.

For self-storage, it is often recommended to have the real estate in its own LLC to protect from liability from the property. The actual business side should be in its own LLC or Corporation, with the appropriate taxation for the active business. That way, you can separate out the liabilities of the property and the business, while also bringing in some tax savings.

Note: This information is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication.

This is great stuff. Thank you for your post.

Oftentimes, when I advise clients on protecting themselves and their investments from liability, I recommend that they own their rental property directly in an LLC set up and registered in the state where the property is located. Just like the location of a property matters for investment growth, it also matters when it comes to legalities. An Ohio property should be in an Ohio LLC to be able to enforce rights there, such as eviction. That will provide protection from liability connected to the property. Favorable protections against personal liability found in Nevada or Wyoming LLCs can be brought in by having a Nevada or Wyoming LLC own the rental LLCs, such as the Ohio LLC, for example.



Note: This information is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication.

Very interesting information.

I do not have experience in real estate investing abroad, but typically here in the United States, it is recommended to own rental or investment properties in limited liability companies or trusts, or a combination of both, to protect yourself from liability stemming from the property. Is there a similar strategy in Germany?



Note: This information is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication.

Great content, thank you for sharing.

These things can vary so much by state, but it is good to have a look at the bird's eye view of the eviction process in Washington.

Oftentimes, I tell clients that it is important to have an LLC set up in the state where the rental property is located to own that property so that it has the right to enforce eviction actions in court. In other words, it wouldn't be prudent to have a Nevada LLC own a Washington rental property. It would be best to have an LLC registered in the state of the property so it can be recognized legally.

Note: This information is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication.