His belief is that if he runs his business the right way and treats tenants the right way, the umbrella would cover any issues that might arise.Not saying that is right or wrong, but just throwing it out there.

My first purchase over 30 years ago the piti equaled the market rent which implies it was cash flow negative when including all expenses.  2012 to 2021 was the good times for RE investing in San Diego, but most people could not see it.  

But in an S-Corp, if you simply *transfer* it to another entity that you own (like a SMLLC), the IRS will treat that transfer as if you sold it to yourself.This is the disconnect.If you originally held the property in a SMLLC, or a partnership, and transferred it to another SMLLC or partnership (IRC 721), there would be no deemed sale (all else being equal.

for example I’d need to make 18 at work to equal 9k rental income.So I calculated that with real estate I’m saving 35% fed 7.75% IL tax 7.25 Social security tax and 0.9% niit tax.50.6% savings ?

Love the subject line....that's a great question...My personal belief is that the right time is always now! 

More markets equals more time needed to track, meet with your team, travel to and from, tax season, etc.  

$450k is pretty cheap for a Cali so maybe it works as rental (don't know the strategy here) but rental cash-flow could take years to equal $225k tax free. 

If you are all putting in different amounts of money, how does that relate to decisions on the property-does everyone (ie all 4 as you and your wife may be 1 vote) have an equal say regardless if they put in $25K or $400K? 

If they are VERY professional, they will have their processes in writing as verification that policies are enforced equally and fairly by their entire staff.6.

Bottomline was a 2022 tax savings (refund) and 2023 quarterly adjustments equaling over $13,000 that we were not expecting.