Should I form a LLC before purchasing my first investment

[Juan S.]

I'm about to purchase my first investment to flip. Should I purchase it under the LLC or not?

[Christopher Phillips]

@Juan S.

It depends...

Flips are normally put under an LLC.

LLCs for rental properties are pass thrus. So, no tax benefits.

Flips on the other hand are often done with an LLC with S-corp tax treatment to help minimize tax issues. You should speak with an accountant before doing anything to make sure you have everything planned properly.

With an LLC, you can only use cash, hard money, or commercial loans. Many people use cash or hard money loans for flips so the LLC is perfectly fine in that situation and hard money usually requires lending with an LLC setup.