Suburban Detroit LLC Setup
Hi,
First I just want to say how grateful I am for everyone's input on here. BiggerPockets has been such a pivotal tool for me in learning so many aspects of REI in such a short time.
I am new to REI and looking to start in the suburbs of Detroit. I went to college in Detroit, and have lived in the area for over 7 years. I am very familiar with where the gems and war zones are. I've also established a marketing strategy I will use within my target area.
I currently work in Detroit as a corporate buyer for a large tier 1 automotive manufacturer. Right now I do not have a substantial amount of capital to invest with, but thru my job I have built up a solid network of wealthier individuals who are looking for investment opportunities. I also have great relationships with a 2 brokers from my hometown (thumb area). If I can present these potential investors with a legitimate wholesaling opportunity, having transparently quantified my due diligence on the property, I believe that this could be my way to break into the REI world.
After reading many forums on setting up the business side of REI, I think having a Parent/Subsidiary structure will be most beneficial, as not only will I have personal asset protection, but also because LLC's are cheap and easy to set up in Michigan. The parent company would just be the "holding company" of each subsidiary. Any offer I would make on a property would be in the name of the subsidiary LLC (one property per LLC). Then once under contract, I would simply look to sell the LLC (wholesale). Any revenues generated from selling the subsidiaries would flow into the Parent company (If I am missing something please let me know!)
My questions are:
1. Would it make sense to be the sole owner of both the parent company, and its' subsidiaries? Or would it be better to add partners onto both, so there'd be a lesser chance of a lawsuit piercing the veil?
2. Since I plan on doing all of the work, is it possible to add on partners, but only for the legal sake of "having partners" but they won't necessarily be compensated? (unless of course they broker the deal, or become a cash/credit partner) In other words, can I just add on "passive" partners who will be more or less mentors?
3. If going this route, would the LLC structures eliminate the need for title insurance/any other insurance, since the only assets each subsidiary LLC will own is one property (or PA to the property)?
4. Instead of creating a parent company, would it be smarter to just personally sell each individual LLC and receive the payment in my name? Or would that not be worth the liability?
I would be extremely appreciative for any input!