How Are You Setting Up Your Passive Investments

Question

Hey all,

I'm curious to know the how people are setting up their passive & active investments. If I'm looking to invest $X as an LP in Multifamily Syndication A, $Y as an LP in Commercial Syndication B, $Z in Self-storage fund C, raise capital as a GP on some deals, etc. and continue doing that, what's the best structure? Basically taking the diverse, passive investing model and adding some active investing in there too. Does each investment have its own LLC? I know active and passive income is taxed differently, so what would be the most optimal structure there?

Don't worry, I know none of this is legal & tax advice and will check with my attorney & CPA.

Thanks in advance!

Ruchit Patel · Answer

Snehann,

Questions related to government laws, better consult experts directly instead of taking random people's advice in pieces and put them together. There enough lawyers provide free consultation for first hour. I can connect them with you, if you message me.

--Ruchit

Snehann Kapnadak · Answer

Thanks everyone! Very helpful responses.

Chris Seveney · Answer

@Todd Dexheimer

I agree. My tax and attorneys have both said when investing as a LP do it in your name.

As a GP it’s another animal and should be discussed with said attorney and cpa

Todd Dexheimer · Answer

As an LP you will be investing in an LLC that will own the real estate. You could set up your own LLC and invest through that or invest through your personal name. Most CPA's/attorney's the I've talk with tell me that there is limited/no advantage.

As a GP, you will be forming a new LLC for the acquisition. This will be the LLC that the LP's will invest in as well.

On the tax question, both LP and GP should have the same taz treatment

How Are You Setting Up Your Passive Investments

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