OK to make offer with a construction LLC?

Question

Do you know of any reason why it wouldn't be a good idea to make an offer using a construction company LLC?

Thanks!

Bill Gulley · Answer

I agree with J. Scott, a business entity should be conducting they the types of business usual and customary to it's charter and by-laws or operating agreement. ..

A real estate company doesn't sell ice cream. A construction company can certainly hold real estate, but the risk exposure in construction is much higher than a property holding company, so as Jason mentioned, you are exposing your properties to a higher risk, IMO. I do think the buisness of construction and holding property is different enough to validate another company, as I did.

Might speak to an accountant to as to consolidating your earnings and having the construction comapny perform work, you may have issues if either are not making money, but it can be an advantage with multiple entities.  :)

Ned Carey · Answer

If you are going to buy and hold, as J  Scott and Bill Gulley said, you should have a separate LLC. You said "some duplexes" That implies more than one so there is even more incentive to create a new LLC.  The more units you ave the more important and the more cost effective it is to have a separate LLC

J Scott · Answer

Consider the worst case scenario -- something bad happens, your construction LLC gets sued, and it loses the lawsuit.  How much is that going to cost you in terms of assets/cash in that LLC?

Is it worth it to spend a few bucks to create a new LLC to avoid that risk?

Brian Sorensen · Answer

I don't have a dedicated LLC for properties yet so I'd like to use my construction LLC to make an offer and possibly close on some duplexes to avoid having them in my name personally. I just don't know if it's a good idea.

Ned Carey · Answer

What do you mean by a "Construction Company LLC?"

What kind of offer on what kind of property? What will your exit strategy be?

In general you wouldn't want to mix the liability of construction with the liability of owning real estate. It would make sense to hold them in separate entities. however the devil is in the details and that may not be necessary.

OK to make offer with a construction LLC?

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