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What is the best company formation to invest in real estate?

Veteran

Oswaldo ramirez North Hollywood, CA

To save on taxs and be able to pull money out and invest in other properties. From Liens to Deeds. I am focusing on rental properties.

1 August 2018 4 replies Mentoring

Answers

Advisor

Michael Millman New Orleans, LA

Hi Oswaldo:
I believe you will find that an LLC (Limited Liability Company) will be the best vehicle for your real estate investments. You should create a "Master LLC" that will be the owner of each of the properties you purchase. Each of the properties should also be separate LLC's owned by the Master. This insulates each of your properties from financial issues of the others and insulates you personally from suits related to either the Master or the individual investment properties.
Doing it this way may seem a bit complicated, but it will provide you the most protection from personal liability and allow each of the properties to have disparate ownership if you want to bring in other investors.

You should discuss this issue with an experienced CPA or tax attorney.

Good luck!

Advisor

Peter Garruba New City, NY

Hello, Oswaldo.
You've already received some great advice here. Additionally, I might suggest you consider getting your Real Estate License. This will give you the inside track on the properties you're interested in as well as provide commission income on all your transactions. If you wish, I can introduce you to someone at Keller Williams Realty in the North Hollywood area to further discuss this possibility. Feel free to contact me at pgarruba@kw.com.
Best of luck to you!
Peter

Advisor

Richard Ilich Norfolk, VA

Hello Oswaldo, Sarah's advice to talk to and accountant (tax adviser) is the best plan of action. If that is not an option I can offer a guess that an LLC would be best for you as there are typically less tax consequences for you and provides you the protection you need. I am not a tax expert but have had LLC's and a C-Corp and again you must remember your individual situation plays a big role in what to chose as well as the size of the business (how much money is flowing through it). In general, you'd probably want to stay away from a C-Corp as you would be taxed twice (21% on earnings and then you pay personal taxes as well). No matter what you do good luck.

Rick

Advisor

ACP AdvisorNet Staff New York, NY

Hi Oswaldo,

Thank you for your question!

I did not know the answer myself, so I contacted an Advisor I work with in the Real Estate business to see if he could provide some insight. While this is not his area of expertise (he does more Corporate Real Estate), he suggested that you speak with a tax adviser who can inform you what kind of business entity to establish: LLC, S-corp, C-corp etc. That will go a long way towards figuring out how you can properly invest.

Additionally, you might want to head to our Community page where you can look for Advisors to connect with one-one-one. I just did a quick search for Advisors in Real Estate within the zip code of 91601 (for North Hollywood) and several people popped up. You could send a private message to them to see if they have availability for a call or email exchange to help you figure this out.

I hope this was helpful!

All the best,

Sarah Bass
ACP AdvisorNet Staff

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