@Derrick Gordon the answers seem to be getting away from your original question. Yes there are at least a couple of reasons to choose an LLC.
They are easier to run with less corporate formalities. This is important for a small operator. If you fail to follow appropriate formalities your LLC or other entity can be "Pierced" meaning a court rules it basically doesn't exist. There goes you liability protection. Less formalities to follow, like annual meeting, means less chance you miss something and your corporate Veil is pierced.
C Corporations are a terrible way to hold property from a taxation viewpoint. Some of this may have changed with the new tax law. One example I believe is you can't do a 1031 tax fee exchange in a C Corp. I will let others more knowledgeable speak to the specifics. (See Correction from Dave Foster below)
Now I will add some additional points;
Taxation and liability are separate issue and what affect one may not affect the other. Do not go to a CPA for legal advice or an attorney for tax advice. This is a common mistake for people new to business.
Liability
Like @Ned J. said an LLC offers less liability protection than many people believe. One issue is what Ned (the other Ned, he must be a smart guy) speaks to is their owners don't run the company properly. It is not that an LLC is inherently weak regarding asset protection but more a matter of careless operation allows them to be pierced.
Some specifics would be: not being properly capitalized, no or inadequate insurance, owner signing name to documents without specifying that they are signing as an officer of the company, not having a separate bank account, not having proper books, not having a separate address or phone number. Most of these things by them self will not cause an entity to be pierced. Each case will be looked at separately. Co-mingling funds or not signing documents are an exception. They alone could cause you to lose your liability protection.
You are always responsible for your own actions.
- You run over a little old lady while driving - you are responsible
- Your employee runs over a little old lady during work - the employee and the company are responsible
- You run over a little old lady while driving for a work purpose. - YOU and your company are responsible
So if you are the only member of an LLC they almost everything the company does will be you doing it. No entity is going to give much if any liability protection in that case.
Despite that above, I don't know any attorneys that own property in their own name. They will always put it in an LLC or other entity.
Taxation
Rents are considered passive income and NOT subject to self employment tax (about 14.5%). Flipping is ordinary or earned income and IS subject to self employment tax.
There is no tax advantage to and LLC. A single member LLC is taxed as if it doesn't exist and the income flows to your personal tax return. A multi member LLC is taxes as a partnership and again your share of the income ultimately flows to your personal return.
You can elect to have your LLC taxed as a "S" corporation. This has no advantage for rentals. However for flipping or earned income it can save you some Self employment tax. Some of your income would came as wages with SE tax and some as dividends not subject to SE tax.
Important - many new investors or business people think they don't pay
tax unless they take money out of the company. If you have an LLC,
whether taxed as a disregarded entity (sole member) partnership, or "S".
you are taxed on All the money the company makes whether you take it out or not.
A traditional C corp is taxed twice. The company files it's own return and pays tax on it. Then any money you take out is taxed again on your personal return. The advantage to the C corp is that money you leave in the company is taxed at a lower rate than on personal returns.
Multiple companies.
So if you hold rentals and do flips you may want more than one company. If you are really large you may even want a C corp as management company. my partner and I have multiple companies: parent LLCs, Baby LLCs and an LLC taxed as an S corp. We didn't start that way. It has evolved over time as our business changed.
Don't be impressed that we have a lot of companies and a complex structure. It is a pain in the butt. One consideration not mentioned here is the cost of running and maintaining a company. There is an actual financial cost; annual LLC fees and accounting fees, for us about $1,000 to $1,500 a year. There is also the cost of time. This is more than one might expect.
As you can see the issue can be quite complex, which is why people say to go to an attorney. However i believe it is worth research before you go to an attorney. When you understand the issues, you can better communicate with your attorney what your needs will be and you will better understand his or her recommendations.
One good resource for legal information is the books and website from NOLO Press.
Good luck.
PS I am not an accountant or Attorney. The above is my laypersons understanding of the law. It is not intended as specific legal or tax advice.
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