Double Close Idealogy
Assignables and Double-close
Recently I have been told that for flips use an S-corp, for holding property use LLC.
It would seem to me that with subject2 you should always use LLC, b/c you are
getting the deed and actually grabbing hold of the property, whereas with an
assignable flip, you would only control the property and get the fee in your corp.
Is this correct? And what if you double-close on a property instead of assignable.
Does it really matter if you sign the contracts as an S-corp or an LLC? 
Legal entities...i would seak the advice of my CPA and ATTORNEY... dont trust the knowledge of the novice....
To get good free sound advice....email....DaveT on this site he's knowledgeable on the tax strategies....
Good luck
Thanks, Dave! The people who have suggested this are gurus like John Hyre and Bill Bronchick, but I'm trying to get to the nitty gritty. Any other ideas anyone?
Quote:
On 2003-09-24 12:50, DaveREI wrote:
Legal entities...i would seak the advice of my CPA and ATTORNEY... dont trust the knowledge of the novice....
To get good free sound advice....email....DaveT on this site he's knowledgeable on the tax strategies....
Good luck
No disrespect to any guru, but unless you've paid them to give you legal advice, it's only an opinion, too.
Dave has given excellent advice, I'd suggest you follow it. ONLY your attorney and CPA can properly guide you as to what entity, if any, that you need to do business the way you will be doing it.
You may be surprised with their answers. Almost every guru, investor, and wannabe will spout off to 'form this or that entity if you're planning on doing this or that type of investing.' However, in my experience most good CPAs and attorneys usually recommend against the small time investor from doing this. Why? Because the benefits simply don't justify the expense and maintenance headaches involved, at the time.
But this, like any responses here, are just opinions. Only your legal and tax professional can actually give you advice.
Roger
I will heed your both of your advice...Thanks!
Quote:The people who have suggested this are gurus like John Hyre and Bill Bronchick, but I'm trying to get to the nitty gritty.ddhamilt,
I believe Bronchick is a proponent of the C-Corp for flipping activities. John Hyre feels the S-Corp is more advantageous for the small investor flipper, but recognizes that the C-Corp has more flexibility in taking business expense writeoffs not afforded to the S-Corp. Both, generally advocate the use of an LLC for long term real estate holdings (your rentals).
However, when you ask John Hyre which business entity is best for you, he will tell you that he would have to review your complete financial posture, your investment strategy, and your other non-real estate activities before he will suggest the entity that is the best fit for you. By the way, if you want John Hyre to do this for you, he will put you on the clock.
The point is that even the gurus will not apply a generalization to a specific situtation without thoroughly examing all the circumstances that may affect their advice.
Dave T,
Thank you. My strategy is to start by wholesaling, moving into rehabs and commercial buy/holds along the way. So I am thinking of starting with an S-corp. Does that sound on target? Then I will form an LLC for rehabs and form buy-holds. But these damn CPAs say "LLC" as soon as I get the word "Real Estate Investing" out of my mouth. I feel like they don't understand that the money from the flip is more akin to a consulting fee than real estate. Is this correct? Anyone else? Gracias.
An LLC can be organized as a partnership, as a corporation, or (within limits) as a disregarded entity.
Perhaps the CPAs were about to propose separate LLC entities for each of your separate investment strategies -- even a different LLC organization for each strategy. Hear them out, keep asking them challenging questions, and keep getting second opinions from other professionals.