What company entity to own SFR in?

Question

What type of entity would you recommend holding your properties in? LLC, partnership, other? I’ll be investing in single family homes and smaller multi family homes. This will be in Oklahoma. Thanks

Chris Davidson · Answer

@Jake Tiffany depends on members/ owners. Why you are creating the entity. You have to provide more info. If you are going to be the only member the IRS will treat it as pass through and it doesn't really matter. If you are doing it for liability it is more important how you operate the company. If you are doing it for anonymity go with the cheapest option.

Read some forms listen to some podcast, then go ask the professionals what makes the most sense for your specific situation.

Zachary Inman · Answer

LLC is what I see most often. Simple, flexible, and effective.

Aaron Porter · Answer

@Jake Tiffany

I work with a company very closely (Royal Legal Solutions) that sets up ownership structures for real estate investors.  The way that they do it (this is the layman's description, and if you want a thorough run through you should get with @Jason Marino @Olia Fogel @Richard Bechtol who are all attorneys)  but the property is owned by a land trust where a lawyer is the trustee (this creates barrier for lawsuits).  the land trust is owned by series LLC's and then you have an operating LLC that handles the incoming and outgoing monies related to the properties.

by layering this type of structure with good insurance you are creating an business model that will not just benefit you and keep you secure and your personal wealth growth growing but it will benefit your children, or heirs.

Tyler Sample · Answer

Following. I have a very similar situation!

Kirsten M. · Answer

I'd talk to an attorney about what they'd recommend. Personally, I use LLCs because it makes the most sense for my business. I'll send you a link to the attorney I used.

Aaron Porter · Answer

• https://www.biggerpockets.com/blog/contributors/scottsmith-2
• There is all kinds of information that you can read and use.
• If you have insurance questions those I can answer. Haha. In this area of asset protection and estate planning this stuff I have just enough knowledge to start the conversation and point in a direction and the I stop before I put my foot in my mouth.

Dan Schwartz · Answer

@Aaron Porter how does a land trust create a barrier to lawsuits?  Can a land trust not be sued?

Jake Tiffany · Answer

Thanks everyone for your input. I love this community. @Aaron Porter, thank you, I’ve not heard of this type of structure and this is exactly the type of info I was looking for. I’ll do some research on this. It looks very interesting.

What company entity to own SFR in?

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