I just wanted to ask the BP community a question. I am about to form my LLC for my real estate investing company (primarily doing multi-family, commercial, MHP, etc.) and wanted to know if I should do one LLC for a holding company and then one for my real estate company? I know next to nothing about holding companies by the way. But I know that besides REI, I am also doing market trading and thought I should put that company and the real estate company all under a holding company. AND if I am going to do that, should I create the holding company before I create my rei company?
Don't complicate you life. Why do you want a holding company?
It is a good idea to have separate companies for different businesses. Stock trading or a retail store for example should probably be in a separate entity from you real estate holdings. If you rehab and flip it is probably a good idea to separate that from buy and hold. (IRS "Dealer" issue)
When you have a large portfolio of real estate you may want it break it up into separate companies. Any very large properties like a large multi unit should probably be in it's own company.
Obviously talk to a tax and lefgal professional to get advice for you specific situation.
Karma, I wouldn't create an LLC before I purchased any property. Once you are in escrow, you can create one and title it in at that time. Too many people create LLC's and then never use them. I would talk to a CPA and an entity attorney so you can synergistically create a plan.
Creating such a structure could have benefits in both limiting liabilities and in reducing or timing taxes. Having said that, it is a very good idea to work with a CPA on your particular situation. An attorney might be a good idea as well, but be warned they only "practice" their profession. ;)
To be serious, talking to a CPA about whether or not it is right for your situation and having an attorney draft the bylaws, articles of incorporation, etc. is a good plan.
As I'm unfamiliar with your exact situation, use of this advice is intended to be general in nature and by using it, you agree to limit my liability to the amount you paid for it (that would be $0, btw). Have a nice day.
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