All Forum Posts by: Sean Morrison

Typically, you will do one or the other. The trust can provide some level of anonymity, but otherwise no real asset protection. The LLC offers the limited liability, and can offer anonymity if structured correctly. Beware the lure of anonymity though, it's lost very quickly once you enter a courtroom.

An LLC is part of an asset protection strategy, even a streamlined one. What assets are you currently holding, and what liabilities are you expecting?

I think that Slidell is a great cash flow area, just be mindful that flood insurance can put a damper on your cash flow if you forget to figure it in. However, not a lot of smaller multi-families on the Northshore.

@Tyler Scott, income from flipping is active (as opposed to passive income from buy-and-holds), and they're taxed differently. The S-Corp allows you to pay yourself a salary, which is subject to withholding, and then take the rest of the profits as dividends (taxed at a lower rate). Otherwise, all your income is taxed as active income, and you must pay the high self-employment tax rate.

Depends on what you're doing with it. You can file the registration online, but it's the operating agreement that can get tricky. My thought is you need an attorney once you have a partner involved. I've fixed many many online LLCs after something has gone wrong. Also, I noticed that you're a flipper/rehabber. You may want to consider an S-Corp for that line of business.

The LLC isn't there for anonymity, it's there to limit liability. But to do that, it needs to hold the assets. You say the LLC is "attached" to the group home, but that the mortgage is your name. Who owns the group home?

You can't really compare insurance and LLCs. While they're both liability management tools, they operate very differently. Insurance helps protect you from liability, while the LLC helps limit its scope. Insurance, without an LLC, can protect you up to the limit of the policy. But if your judgment goes beyond your insurance limits, then everything you own is potentially at stake. An LLC without insurance provides no liability protection, but does limit the damage just to the assets owned by the LLC.

The discussion on whether to put each property in an LLC is really about risk tolerance. There is a cost to each one, as @Guifre Mora has explained, and you need to recognize how that fits in your risk mitigation. But remember, insurance is your first line of defense. 

The second thing to point out is that the LLC is a great structure for holding real estate. However, it may not be best for flipping and wholesaling, and these activities need to be segregated. You need to separate your passive and active incomes to make clear what your tax liabilities will be.

Go to the Ohio Secretary of State's website. Somewhere on there will be the form to file as a foreign entity. It can't be backdated, because their date will reflect when it's filed with them.

I can't speak to California taxes or anything. If you're investing in an out-of-state property, you should get an LLC in that state. Even if you have a "landlord friendly" state LLC, the local state is going to apply local rules because it's real estate. And you'll need to file as a foreign LLC in the local state, with the associated fees and taxes. You won't get those friendly protections, and will be paying extra. Sometimes, it's even cheaper to create a local LLC than file as a foreign LLC.

I don't know how that is treated in California.