Due to slow process of obtaining more investment properties. Is it okay to use my real estate LLC to do renovation and/or flip projects? Do I need to have a separate LLC for different different purposes.
Thank you in advance BP Community for all your advice.
You can. It's definitely cleaner to do a different LLC for every deal, but that becomes a huge hassle if you're flipping a lot of properties. They're a lot more common for larger deals
Fun fact: some lenders with nice terms require a distinct LLC be formed for the project
You will be fine with one LLC. If you get into a situation where different projects have different partners set up separate entities. If its just you its all your money anyways.
Just a side note, when flipping houses its not a good financial move to use an LLC. For tax purposes you are better off w an S-Corp. As an example (somplified) if your LLC has $100K in net income you would pay 15% SE tax on the entire $100K and 35% income tax. You would be left with roughly $50K. With an S-Corp you could take a $30K salary for the year and pay 15% SS tax on your salary. You would pay 35% income tax on your salary and the $70K distribution. Your tax liability is now only $39,500 leaving you with $60,500. The LLC cost you $10,500 more than the S-Corp.
I greatly appreciate all of your advice and time to respond.
Rob: Thank you so much for the extra input. When we decide to do a flip, I will definitely look into setting up an S-Corp.
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