What Type Of Entity Is The Best Way...

Comments(5)

• 
  hibby766th February, 2004

  For buy and hold, LLC hands down.
  
  Use a title holding land trust on top of that if you want to get a little bit fancier and spend an extra $10.
  
  With any business entity you'll end up writing off more expenses than if you owned it personally.
  
  An LLC gives you liability protection in a simple form that is flexible, unregulated, and only taxed one time. All income is treated as personal income.
  
  The trust gives you privacy. [ Edited by hibby76 on Date 02/06/2004 ]

• 
  InActive_Account6th February, 2004

  Thanks Hibby76.
  
  An LLC is the way I'll go.
  
  Erik

• 
  rajwarrior7th February, 2004

  Erik,
  
  Getting one opinion from a stranger is not the best way to choose your REI career decisions.
  
  Anything you get here will just be opinions, and nothing more. No one here knows your plans, your income situation, etc. in order to give you a professional, qualified answer. Your best bet is to talk with both your legal counsel and tax advisor BEFORE making such a big decision. In alot of cases, forming a business entity will cost you money, both in operating costs and taxes paid.
  
  My opinion is, if you haven't yet done in REI deals, then you don't need to be looking at forming a business entity yet. You don't yet know if you'll actually buy a property, if you'll be able to continue to buy and sell properties, or for that matter, if you even like to do it. Why spend the money on forming a business structure that may never get used?
  
  It amazes me that so many in this field suggest that newbies "form this entity, form that entity, spend this money on that, spend this money on this" advice, especially when, at least inititially, it is unnecessary. I understand that people feared getting sued, but an ethical approach to business and a good insurance policy is your protection from that, not an entity.
  
  Over 70% of all businesses in the U.S. are still privately owned, ie not a corp, LLC, etc. and they don't seem to have a problem with it. I think that you'd be okay for a few months at least, until you decide if the business is going to last.
  
  Roger

• 
  InActive_Account7th February, 2004

  Thanks Roger
  
  Advice taken.
  
  I'm reading and absorbing as much as possible still finding this great forum just 3 days ago. Everyday, I feel like I've learned sooo much more then just the day before.
  
  Slowly but surely, coming together!
  
  One day soon I hope to be the one giving advice to those who are in my shoes now.
  
  Thanks Again.
  
  Erik

• 
  JeffAdams7th February, 2004

  I agree 100% with RAJwarrior!
  Dont worry about the entity, worry about
  education and finding your first deal!
  
  Once you do that, I would recommend
  buying and selling in a corporation like
  hibby mentioned and keeping your rentals in a
  Land Trust. The bottom line is you dont want to keep all your foxes in one hole!
  
  Best Riches,
  Jeffrey Adam
  
  _________________
  "The only place success comes before work
  is in the dictionary."[ Edited by JeffreyAdam on Date 02/07/2004 ]