What kind of entity do I need?

Question

Need some advice here. 2 of my brothers and I are going to purchase a house for $715k and turn it into a large AirBnb in Memphis TN. What entity (if any) should we buy the house in? LLC? Family Trust? Something else? Thanks in advance.

Tanvir Sattar · Answer

@Adam Fisher you can never go wrong with an LLC. That way you separate all of your personal assets from your business.

Patricia Steiner · Answer

Know your risk and that will drive you to some options.  Be sure you understand what your limitations are when you title in a Family Trust.  There is no liability protection with it..."Revocable living trusts don't, however, protect your assets from people with legal claims against you. That's because although the trust is a legal entity, for legal purposes you're treated as the owner of the trust assets." (Source: Nolo.com)

Then read this:  https://www.apartments.com/ren...

Again, know your risk and then choose the best protection based on that scenario.  And, you do have a contract with your family members on this purchase, right?  You have assigned roles so that those ugly family power plays are avoided, right?  You have determined at what point you sell and what to do if one person wants out, right?  Sometimes the greatest risk is the one you create upfront.

Hope this helps and congrats on your new business.

Best.