Entity Setup?

Question

I am just beginning my REI company and am looking for advice on what entity to set up. I have read about individuals opening 2 LLC's and an S Corp, however with me being brand new to this and not at a rental stage, I am wondering what is my best option? I am hoping to Wholesale, Wholesale Assign, and Hold-Rehab-Resell...

David Dachtera · Answer

Hi, @Alex Heckaman,

Conventional wisdom is that long-term holds like rentals you want to hold in an LLC, and short term deals like fix-and-flips and rehabs you want to do in an S-Corp. Contact a business/tax attorney and/or accountant - preferably someone in both professions - so you can discuss what you want and determine a suitable strategy.

Jarred Sleeth · Answer

Alex,

Welcome to BP! What you'll absolutely need to do is consult a real estate attorney and a CPA. Every persons situation will be different and there are plenty of ways to go about this. In order to determine what's best for you and your goals, you should consult the experts in your circle.

If you need help finding qualified professionals in your area, I would try to go to some local real estate investing meetup groups and ask around.

Good luck!

Linda Weygant · Answer

@Brandon Hall wrote an excellent article on questions to ask a potential CPA.  Brandon, can you link it here for @Alex Heckaman?

Ned Carey · Answer

What entity you set up if any depends on what you want to do. Flipping vs renting vs wholesaling may all have different pros and cons for each type of entity. Your personal financial situation makes a difference too.

There are both legal/liability issues as well as tax/accounting issues. Your attorney and CPA may give conflicting advice. NOLO Press publishes books on the subject and has a very good website, so you can be better prepared when dealing with legal and accounting professionals.

Alex Heckaman · Answer

Thank You both!

Brandon Hall · Answer

@Linda Weygant thank you for the mention.

@Alex Heckaman here is the article:

https://www.biggerpockets.com/renewsblog/2015/03/0...

Alex Heckaman · Answer

Thank you guys for your responses! I am currently seeking RE Attorney and CPA. Any suggestions on important factors to consider in hiring these individuals?

Entity Setup?

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