Woodbury, NJ · Member since 2016 · 1 post · 0 votes
Hi everyone , I'm New to the house flipping business. I'm looking for advice/opinions, I'm about to have a attorney setup a LLC for me, I know you can due it yourself cheaper but I heard you don't receive the same protection for your assets . Is this true / stories of not being protected as a LLC. As a LLC I would then take out a business loan to buy my first house.
Setting up the LLC is generally not where you run into asset protection problems. A DIY business entity can be just as valid as one created by an attorney. You may want to seek out an attorney if you are looking for a registered agent or if you are going into business with a partner, because there can be numerous decisions that need to be made regarding the arrangements between the members of the LLC.
Asset protection problems usually arise when you don't run the company as a separate entity. One of the most common methods is by combining business and personal funds.
The area you should consider speaking with an attorney is regarding the purchase of the home and ensuring title is accurately placed within the LLC. Also, be careful reviewing the loan/mortgage you will be taking out on the property to verify that the LLC will own the property or, if transferred to the LLC after closing, that the transfer does not trigger the "due on sale" clause of the loan.