LLC Entity Before Wholesaling

3 Replies

This, I believe, has been a much-discussed topic, however, couldn't find a solid answer and would simply like some reassurance.

So, I'm looking to start wholesaling, eventually getting into other strategies of REI at a later date, but am curious how wise it would be to create an LLC prior to wholesaling. Now granted, I've heard two circumstances here:

Circumstance A: Create an LLC to use on the contracts so as to limit any personal liability.

Circumstance B: No need to create an LLC as wholesalers typically do not hold any property or possessions long enough for a suit to incur. (Not really sure how this is, but I've read this on a couple posts around BP)

Conclusively, I considered just doing an LLC prior to doing wholesaling to limit my liability as, contraire to Circumstance B, if I were to put my name on a contract, it could still open a gateway to personal liability.

Would love input and feedback on this matter. 

I use LLC's, but a different way. I have a number of disposable LLC's at my fingertips at all times. The offers are made by the LLC. When I have an accepted offer, to wholesale it, I just sell the LLC to the new investor...and they close as the new owner of the LLC.

@Joe Villeneuve

Do you file for your own LLC's, or do you pay a service to create LLC's for you? I'm just concerned how fast the money can rack out in service fees and state filing fees if a third-party does it. And even if you do it, state filing fees can be costly.

Originally posted by @Dustin Verley :

@Joe Villeneuve

Do you file for your own LLC's, or do you pay a service to create LLC's for you? I'm just concerned how fast the money can rack out in service fees and state filing fees if a third-party does it. And even if you do it, state filing fees can be costly.

I do it myself. Simple forms for both LLC and EIN.

Cost varies by state. Here in MI, it costs $50 to start one, and $25/year to keep it current. Some other states cost's are so high you need to take out a mortgage for each one. I'm not familiar with your state's costs. REI in those states will usually use a Trust instead.