Estate Flipping Flip

Estate Flipping Flip

I'd like to become a real estate investor (flipping homes or keeping some for rental). Should I incorporate?

I have an opportunity to get into purchasing foreclosure properties. I'd like to either flip the homes or keep some for rental income. I'm thinking of setting up LLC for this purpose, and was wondering if this is a wise move?

As a real estate investor of 10 years. I will never do a deal without having an incorporation structure setup. Real estate especially has "No Small Mistakes" the errors in real estate that can be liabilities are usually big ones and with today's litigious society it won't be hard to find an attorney that won't get dollar signs in their eyes when suing a "Real Estate Investor".

One lawsuit can potentially tie up all yous assets and hamper your ability to do business. That reason alone you should keep your personal assets separate from your business assets. Especially in the case of many real estate investors that have managed to pay off their own residence through real estate profits. This can potentially be lethal as attorneys are notorious for proceeding against you based on your assets rather than their clients case. (Oftentimes Lawyers make the decision on who and for how much based solely on assets and not liability)

What I personally do is keep all my personal assets in my name, I keep all my long term rentals in another LLC, and my Fix and flips in another LLC. This keeps my assets evenly divided across multiple entities and in the event of a catastrophic lawsuit will not hamper my day to day business dealings.

Entity planning and asset protection is an exercise of "Worst Case Scenario Planning" We hope that we will never be sued, we run our business in a way that we won"t get sued but in the event that it does happen you need protection for yourself.

It is also important to set up an entity for tax purposes. Using the right entity can get you tax shelter and all kinds of deductions that can enable you to shelter large amounts of income easily. Real Estate has tons and tons of tax loopholes and strategies so you should consult with a well qualified tax attorney to make the best determination.

These reason that I have given are the top reasons for incorporating, there are many others as well that I haven't mentioned. These 2 are so important that they alone should make the case.

Real Estate Flipping Machine Review

Estate Flipping Flip

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