Examples of investors biz structure

[Savana Rose]

I'm interested in knowing more about what kinds of structures some of you have for your businesses and whether it might work for me. (I will be seeking an attorneys advice as well) But before I do that, I want to get an idea of how others are setting up their biz entity.

I have a business partner and we will be equal partners. We will have an investor who will put up cash for buying properties and we may have to borrow as well. We'll be doing flips and possibly buy & hold rentals. My partner and I will find the properties, put them into contract, supervise all renovations and work with the selling agent, or become the property manager in the buy/hold scenario. We would want to split profits with our investor(s), but we'll manage everything.

Any examples out there of a similar business set up or what you've seen work for something like this?

Thanks!
Savana

[Aaron Mazzrillo]

You really need to understand how entities are taxed in your state before you decide what is right for you.

In CA, I run a C corp because LLCs have gross receipts tax. I also don't believe they offer the protection that many people think they do. At least not in this state. An S corp would probably be more suitable, but I prefer the C for many reasons.

I notice your post says you 'will' be doing business. I don't know your situation, so I am only guessing that you are just getting started. I may be wrong, but if you are or any one else reading this post is, don't waste your time with all the busy work of figuring out this type of stuff and go out and do some deals. So many new investors get hung up on business cards, business name, website, email address, phone number, blah, blah blah. It is all stuff you can do along the way. Get some deals under your belt, use some of the money you make and pay people to do this stuff for you. I don't even have a business card. Nobody cares what my company name is. I don't have an office. My website sucks and never made me any money anyway.

Sellers want to know one thing: How much am I going to give them for their house. They don't care about any of the rest of that stuff.