Best type of LLC in Texas for REI

4 Replies

From a tax perspective you will generally want to use different entities to do your flips versus your long-term rentals.  Depending on number of rentals and growth no entity but strong insurance might make sense initially for the long-term rentals.

For flips an LLC with an S election might make sense depending on projected net taxable and reasonable compensation. Otherwise an LLC that is disregarded (SMLLC) or taxed as a partnership (MMLLC) might make sense initially.

You'll want to have a conversation with your tax CPA/EA.

There's a legal side that needs to be considered as well.

@Ryan O'Donnell -- Welcome, first and foremost. It just so happens I have some info for you that was published when you asked this question!

Thanks for the shout-out @Brian Eastman .  You rock.

Ryan, you can see the articles on both the different types of LLCs and Series LLC vs. Traditional LLC at this link. Those should answer your very basic questions. And yes, I'm a HUGE evangelist of the Series LLC for real estate investors. If you'd like information on that, let me know what you need to know. It's truly the biggest innovation in asset protection that I'm aware of. And it makes running and growing your business easier/less expensive. I'm just a big fan. Of course, your situation might be unique. So read up on your options, and I'm happy to answer any questions you may have.

Which LLCs I form typically depend on whether you want a single LLC or you desire the extra protection of multiple LLCs. If a single one, I tend to do a series LLC. If mutliple, I do a series LLC to own real estate, and a non-series LLC to act as an operations company that does not own anything substantial. If you're buying in cash, we can also do a third LLC to act as an asset stripping finance company.