Which is better when flipping a house/houses
Is it better to open up a fed ID and flip houses under the business name or is it better to flip them under your personal name
I know liability wise people use Fed ID but are there any other advantages?
tax breaks? etc?
Re: Which is better when flipping a house/houses
If you're looking at flipping houses, you might look into setting up an LLC that's taxed as an S-Corp after you've landed your first deal.
The benefits to the S-Corp taxation is that you can take a distribution above what your salary is, for example, you take an annual salary of $40,000 and you earned $70,000 for the year, $30,000 of it can come as a distribution. At least that's how I understand it.
Also, if you're looking into LLC's, look into the benefits of forming them in Nevada / Deleware vs. your home state for charging order protection.
Or just PM GlobalWealth
"If you want to be rich, add VALUE to people's lives."
- Brian Sher
GlobalWealth (Jul 18th, 2010)
Re: Which is better when flipping a house/houses
LLC for your flipping company... But plan on taking ownership of the houses in your personal name, since nobody is going to loan money to your LLC.
- Hakrjak
"Don't let good enough be good enough" -- Coach Bill Parcells to Tony Romo upon leaving the Dallas Cowboys.
Re: Which is better when flipping a house/houses
I agree with these guys, there's a large tax disadvantage to flip houses under your normal name. An LLC will help you protect yourself from legal and credit liabilities as well.
Re: Which is better when flipping a house/houses
My bank will.Originally Posted by hakrjak
If what you did yesterday still looks big; you haven't accomplished much today!
Re: Which is better when flipping a house/houses
I buy all property through my company, your name should be on nothing.
If you have some financial strength you can get a loan on a property held in an LLC. The bank will look at your financials, since the company is new.
As for forming your company everyones situation is different. I had my attorney do it and brought my accountant in on the phone. Your team will help you determine the best form for your new business, thats why you pay them.
"Starvation is God's way of punishing those who have no faith in Capitalism."
R. Cobb
Re: Which is better when flipping a house/houses
If anyone is investing in RE and NOT setting up ownership through an LLC, they are crazy or ill informed. Most likely you will need to personally guarantee the mortgage unless your company has an extensive history, but there are several other factors to consider when it comes to liability. Sure, you can get insurance, but what happens when the next tenant kills someone and you get sued for $3M? I doubt your liability will cover that, and then you are personally liable. There are also privacy issues to consider. Do you think Donald Trump owns property in his name? What about uncle Joe? Who would you rather emulate?
Bobby Casey - GWP - LinkedIn - FB - EscapeWealth - Overseas Radio Network
Domestic and Offshore Asset Protection
Re: Which is better when flipping a house/houses
globalwealth, how could you get sued for somebody committing a crime in a house you own? isn't the owner of the house irrelevant at that point?
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