Good strategy or not??

[Tonja Raphael]

Hello guys: Can I get your take on whether it would be a good strategy or not, to have your buy and hold properties as a separate business from your flipped properties. I was told doing so would protect the assets of one in the event the other entity was sued.

[Ian Price]

Great question! It all depends on the structure of the entity. I won't answer any specifics since not attorney or cpa! Checkout the latest podcast! They cover this towards the end of it.

https://www.biggerpockets.com/renewsblog/bp-podcas... 

[Shawn Ackerman]

@Tonja Raphael I think @Ian Price is spot on!  A question such as yours involves delving a bit deeper into your situation and entity structure.  Remain persistent on seeking your answer and you'll find it.  

[Tonja Raphael]

Ian Price Shawn Ackerman Thanks for the feedback. Will definitely view the suggested podcast.

[Rosston Smith]

I would separate the entities, yes

[David Faulkner]

It depends on volume and value of the transactions and properties involved. How much are you trying to protect and how much will it cost you (rhetorical question, no need to answer here just consider)? If it is only onesie twosie type transactions on a few low cost (under a mill total, say) units, then I'd tend to sway towards holding in your own name with an umbrella insurance policy.

Also, flips are a different animal and have different tax implications ... I've heard that S-corp (or LLC w/ S-corp designation) may be used to shelter some of that income (the income left after paying yourself a "reasonable" salary from the corp). Again, though, it will depend on volume and value to determine if it is worth it. Consult both an attorney and CPA.

Finally, if you are flipping using hard money loans, then many (but not all) hard money or private money lenders prefer to lend to a legal entity than to an individual due to the new and stricter lending laws.