Wholesaler · Wilmington, NC · Member since 2008 · 6 posts · 0 votes
Quick question about business structure. I was recently talking to my accountant about my planned start in the wholesaling business . We talked a little about tax implications and then she brought up a good question. "Why do you want to form an LLC"? I answered that I wanted to protect my assets. We talked a little about it, and came to the conclusion that there is not really much liability in wholesaling and it may not be worth the hassle to set up and manage the LLC.
Disclaimer: This was an accountant, not an attorney. I'm also not sure how familiar she is with wholesaling in particular, and real estate investing in general.
Any thoughts are appreciated!
Southport, NC · Member since 2011 · 5 posts · 0 votes
14y
Matt, I have heard similar feedback from my insurance agent. When I told him what I planned to regarding wholesaling real estate, he said he did not see a source of liability clear enough to issue a policy for. He told me to speak with an attorney and determine just what kind of risk there was and let him know so they could write a suitable policy.
When I mentioned that I would eventually move to rehabbing, he did go ahead and quote me for general liability based on rehabbing construction, as well as coverage for any possible accidents while showing a property.
I am still in the process of creating an LLC through my attorney, and do plan to carry a decent policy once my agent figures out what to actually cover me for :D
FWIW, I mentioned an umbrella policy to my agent since I have seen that tossed around here a bit, but he said umbrella policies are for individuals. I guess if I can't find a good policy to cover the LLC I can take out a personal umbrella policy for peace of mind.
It's quite strange, as usually, you will hear people say that you can't over-insure yourself. Now I am finding that the people who would actually gain from selling me the insurance, say I don't need it. Is it really that what we do is SO risky no ins. company wants to touch us?
Wholesaler · Wilmington, NC · Member since 2008 · 6 posts · 0 votes
14y
Sounds like you have an agent that's not willing to take advantage of you. Good trait in in insurance agent! My wife is in insurance and so many agents will work a client over for a bit of commission.