New Investor in Phoenix Deer Valley

6 Replies

As mentioned above, I live in Deer Valley and would like to become a real estate investor. I've bee listening to more and more podcasts and gaining interested in investment strategies and opportunities. I am working full time as an engineer but learning real estate in my free time. I am currently interested in house hacking a single family home and renting to colleagues and friends. I have already contacted a mortgage broker, real estate agent, and cpa. I am considering creating an s corp or llc for the property to utilize the limited liability and tax benefits, but I'm not sure if that would be better than a traditional house hack.

I've been researching various options for a couple months and gathering information from the above sources but I wanted to get another opinion on my options.

Any insight would be greatly appreciated.

Thank you,

Monty B.

@Monty Bruckman

Welcome to BP! Sounds like you are on the right path and educating yourself. House hacking is a great way to get started. Come out to some of the local meetups and rub elbows with some like minded individuals. Hope to see you around!

An LLC is a great way to protect your personal assets from being used to satisfy rental debts. You may not have to choose between LLC and house hacking, either. If your lender will allow you to put your primary residence in an LLC (or if you can refinance to the LLC), you can then house hack by renting to roommates under the LLC. Check with your lender and CPA to confirm this will work in your particular situation. There are some issues with claiming the Section 121 exclusion (for tax-free profits from the sale of a personal residence), but this can be avoided if you have a single-member LLC that is disregarded as an entity for tax purposes.

Hi thank you for the responses! I will take a look at events near me and try to attend a few. So me and my brother are going to be partner investors in our deal and after speaking to a cpa, she recommended to create an s-corp instead of an llc because of partnership regulations and a couple other draw backs. I spoke with a broker and cpa and it looks like I can get a conventional loan, first time home buyer with great down payment and interest rates, and transfer the title into the s-corp after closing without refinancing. This seems like a great option to get the liability and tax benefits from the corp while also getting a great deal with the first time home buyer rates.

Just to confirm, the 121 exclusion is the law on a seller not being required to pay capital gains tax if the gain is less than 250k?


Originally posted by @Michael Heisterkamp :

Just an FYI, a single member LLC doesn't qualify for the same legal protections as many people think they do.

Can you please provide more context into this?
What if a Single-member LLC operates like a business(Contracts are in the business name, bank account is in the business name, no co-mingling of funds). Would the single-member LLC not get the same protections as a multi-member LLC?

I am not an attorney and I don't practice law, I hear this often but i don't understand how this doesn't work.


@Basit Siddiqi It has to do with the legal definitions that surround an LLC and the fact that legal protections stem from partnership rules. I can't speak to the specifics as to why this is the case just know it is. You should always have a second person in your LLC unless it is merely for branding purposes. You can add a memeber to an LLC fairly easily, but it is not as easy as adding their name. This is why I always recommend a S-Corp. I could be wrong about this last bit but in anotner business entity owns an LLC then the multi member rules don't work the same. So you could simply set up an S-Corp and transfer the LLC to that.

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