Do I need and attorney, REI specialized CPA, or both?

Question

Hi there! My father and I just purchased our first house, all cash deal. We are looking to flip the house for profit. We did use the 70% rule, and it passed by a good margin.

Now, we are wanting to know if we should establish an LLC or not, and if so do we contact a tax pro who knows REI, an attorney, or both? Maybe none of the above?

Wanting to learn as much as I can! Any and all advice is appreciated!

Andrew Bauer · Answer

@Nick Walters congrats on your first deal! You will find many varied opinions on this site as to whether or not you should form an LLC (or other legal entity). If you are serious about this business and plan to continue doing deals in the future, I think you should seriously consider forming an LLC (or other legal entity).

I would encourage you to get both a tax professional and a real estate attorney on your team. A local attorney will be best able to advise you about the best legal entity for your business based on your state's laws and the type of business you transact. A local attorney will also explain to you what practices and procedures you must follow in order to be sure the LLC (the LLC won't do you any good if you don't know what you have to do to maintain the protection it is intended to provide). Meanwhile, a tax professional will help you understand how to best structure and run your business so as to decrease your tax liability as much as possible. If you need recommendations, it's likely that there are members on this site from your area that can point you to an attorney or CPA they have had a good experience with.

Good luck!

Mohammad Akif · Answer

@Nick Walters Congratulation on getting a good margin on first deal. Its a very important step towards the growth of your fortune. I always recommend my clients to form entities whether its LLC Corp or LLP to business for protection and tax purposes. By large, real estate investors lean towards LLC as an entity structure but for tax structure it varies situation by situation of each person. We look at many factors before deciding on a suitable tax structure.

Nick Walters · Answer

@Andrew Bauer thanks for your advice! Much appreciated! We certainly do plan on doing many of these deals going forward!