Any Real estate C corps out there?

Question

I'm just curious if there are any investors here that have their real estate in C Corps? If you do I would love to hear the advantages and disadvantages you feel like you have with the C Corp.

I know the LLC is more popular, just curious about the experience of those using C Corp.

Thanks.

Frank Chin · Answer

Some years back, I had businesses in LLC's, S Corp, as well as a C Corp. Believe it or not, I had my rental properties owned personally using umbrella insurance to mitigate risks, even though I had an LLC for one of my active businesses.

My research back then indicate disadvantages to using C Corp for rentals, and it still is. See: C Corps for real estate

Believe it or not, I did not use LLC's to hold rentals as I was aware that litigants sue you personally anyway whether you have an LLC or not. When I had an active business, it's in an LLC, I bought liability insurance for it, and my insurance agent advise I should buy an additional endorsement that covers me personally as well, as people sue the LLC and it's owner, both, by default, and she's seen it many times. The reason for the LLC to me is to keep it's operations separate and distinct from my other businesses, for operational reasons. It keeps my worker's comp, unemployment insurance separate, and when they do audits for them, you're not co-mingling it with your other businesses. They do on site inspections, and I had a few done, the audit is only for one business, not three or four at other locations. And when I had to obtain health insurance for my family, state law requires me to also cover my employees.

That's why I set up a separate C Corp management company for my rentals. The management company charges fees which is deducted on my schedule E, under management fees, and I wrote up a benefit plan for the C Corp to cover my health insurance as well as co-pays and other expenses not covered by insurance. It gives me greater flexibility and everything is deducted so long it's in the plan. As to the C Corp holding title to real estate, NO.