Looking for like minded individuals just starting out

10 Replies

Hello all!

Wanted to introduce myself as well as let everyone know what I am involved in/goals. I am investing in the k.c. Area and looking to build a team, and create an llc to protect assets. I am interested in partnering with the right people and would like to talk shop. End goal is to own a diverse portfolio of real estate. Oh yea, and I am looking to invest in 2 properties in the next few months. Lets connect!

Logan, a tip, not sure what you mean by "like minded" but if you hang around those that think like you, that are also new, you won't learn anything, you'll probably end up with some real misconceptions.

Successful people surround themselves with experts in their areas of knowledge, those are the people you should seek to learn from.

A group of people, as a group are usually no smarter than the dumbest one in the group, attend some government meets and you'll understand.

Make connections as Rich mentioned. Take care in who you appoint as your secret mentor or follow and especially who you choose to learn from.

Good luck :)

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@Logan Freeman don't bother with an LLC. Just set up a simple real estate trust. The LLC is no better at protecting you from liability than the trust in reality. Just be sure you bump your G/L limits to $1M on any property you own. Anybody that wants to sue you is going to hire a lawyer and find out immediately who owns the LLC and sue you personally as well as sue your LLC. Save your money. It's expensive to set up and expensive to maintain annually with added expense for an accountant,filing fees, etc... Wait until you have a sizable portfolio and business partners. Use the corporate structure to protect your assets from your business partners not your tenants.

Originally posted by @Account Closed :
I tend to listen to what Bill says !

@Bill Gulley even though he is from Missouri he is almost as intelligent as an Okie!

:^)

Obviously, then all Okies aren't as simple minded as I thought!

LOL

BTW, Trusts are not the best business structure as there will be limitations as to deductible expenses in administration for a small operator.

No entity protects you from liability from your management or activities that you are engaged in, insurance takes care of that. Form your business entity for business purposes and taxation, not as a protection matter so much. Insurance and bonds can be used between partners as well. See an attorney and an accountant in forming the correct entity for your needs. :)

@Bill Gulley I'm not aware of any expenses that are incurred in the operation of a real estate business that aren't deductible. Do you have an example? I agree about the liability situation I just firmly believe that people over think the decision of which ownership entity to use with investment real estate. And for the record, I'm not an attorney nor an accountant I just speak about my personal experiences in real estate and business in general.

Originally posted by @Rob Beland :
@Bill Gulley I'm not aware of any expenses that are incurred in the operation of a real estate business that aren't deductible. Do you have an example? I agree about the liability situation I just firmly believe that people over think the decision of which ownership entity to use with investment real estate. And for the record, I'm not an attorney nor an accountant I just speak about my personal experiences in real estate and business in general.

First thing that pops to mind is auto expenses. Running around looking for properties to buy is not a trust administration expense, it's not related to trust administration until after an asset is held in trust. In an LLC, there is the business purpose, that includes driving for dollars and can be expensed as a related business cost.

That's why people need to see an attorney and accountant to select the best option for them, under their circumstances and not assume that since Joe does his stuff this way, that's what I should do.

I suppose I need to admit to being a degreed accountant, one of many hats worn :)

@Bill Gulley Technically speaking you are correct and since you are a degreed accountant you are likely very qualified. I would say the cost associated with setting up and keeping up an LLC, in my opinion, far outweighs the limited tax benefits that can be realized in the day to day business of finding investment properties. If the argument is going to be made to go with an LLC over a trust, which I'm not saying you are making, I would say why not go with an S Corp. It's still a pass through entity but you don't have to dissolve the S Corp. eventually in the same manner as an LLC.

LLCs have a stated term, like 20 years, upon the affirmative vote of the member(s) the LLC may be renewed for that like or any other term.

Costs vary by state, accounting will be much the same, compliance is about the same, an advantage of a trust is no minutes of meetings except authorizations to purchase property are needed in some states, that can be about the same.

The advantage is that a trust is not a business entity allowing expenses prior to an asset being acquired, you'd have a hard time deducting a real estate seminar on flipping unless there were trust administration aspects. Trust administration is not the entire business function that RE types get into.

But, if a trust works for you, by all means.....again, I suggest seeing an attorney and accountant.

BTW, let's not hijack his thread just on business entities, they are discussed on BP in depth. :)

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