Corporation and Land Trust Questions

Hi all,

I’m a newbie investor who is interested in buying my first property to live in. I guess that makes me a potential first time home owner as well!

My plan is to buy my first home via an owner in pre-foreclosure.

Is there any reason for me to incorporate for this purchase? Or buy via a land trust?

The only obvious reason I see to incorporate is if I eventually move and decide to rent out this property. The limited liability would make sense at that point. Surely I could just wait until that point to form my corporation, correct?

As for the land trust, besides the anonymity, is there any benefit? Does it allow me to assume without invocation of a due on sale clause?

I appreciate any insight any of you can give.
Thanks a lot in advance!

I would not put your personal residence in any kind of entity, especially if you are going to be moving in the future. Properties that make good personal homes usually are not good rentals. Therefore, it is usually better to simply sell your personal residence and buy a proper rental property. If you buy your property with an LLC or corporation, you will lose the capital gains exemption when you sell. Generally, NEVER BUY YOUR PERSONAL RESIDENCE IN AN ENTITY!

Good Luck,


Hi Mike,

Firstly, thank you for your great advice! I appreciate it.

Your answer makes great sense in my mind if I never plan to live in an investment property. I would leverage the capital gains exemption every few years as I sell my own residence and buy a new home. And I would use a separate entity to buy and manage my investment properties. Everything is separated.

I see your point about rental properties not being ideal personal homes. Since I’m just starting out and this is my first home, I’m thinking of getting a multifamily property and living in one of the units. Not ideal, but I figure the cashflow from renting the other units will help with the monthly costs as I get started. In a few years, I’d move out and keep the property to be used entirely as a rental property.

What structure should I use if I buy a multifamily property and immediately live in one of the units? Should I use an entity?

Do you suggest this approach? Or should I just focus on buying my own personal property first and then buy a separate investment property later when I have more capital? (keeping everything separated)

Thanks for reading this message Mike. I know I have a lot of questions, but as a newbie, any help you can give is appreciated!


if you’re going to start a business - then decide which entity is best.

try not to get caught up in the “asset protection” mantra - don’t get me wrong, it’s definitely important and what you’ll find is the LLC is a very good entity to hold real estate in. it’s easier to run than a corp (paperwork wise)…

for this entity you want to start, before you go there, develop your knowledge about the business of real estate. this will help guide you to making better decisions.

as for learning real estate in general - which is different than the business of re…you may want to look into the different ways each entity holds real estate, and how each will provide you with liability protections etc.

for instance, a corp holds title as a completely seperate entity - fee simple - the owners/shareholders, officers etc. do not have any ownership of the property themselves…the corp owns the property