What do you guys think the best way to setup your real estate investment business is?
I mainly want to buy & hold my properties. At some point, I would like 100 or more properties. I want to setup everything correctly at the beginning so I’m not penalized later.
Thanks for any replies
-Jeff
If you are looking for estate planning, put everything you own (except your car and your primary residence) in a (family) LLC. Put your home in a revocable trust. If you are looking for asset protection, separate your dangerous assets from your safe assets. Put the dangerous assets, such as your rental property and your business activity, into one (or more LLCs) and put the safe assets in a separate LLC.
Have the “safe” LLC be the sole member of the “dangerous” LLC. If you are married, establish the safe LLC ownership percentage between you and your spouse to provide the most advantageous estate transfer based upon the most likely probablility of the first to die.
Dave said some good stuff. If you plan to grow your estate in excess of the current exemption, some kind of irrevocable trust can be established now and you won’t have to worry about gift taxes and crummy letters, etc.
There is no best way. There is only the best way for you. A qualified planner will sit with you and discuss various options relative to your goals and situation. He will review estate planning, taxation, financial planning, estate planning, and many other topics. Here are jsut a few things that can totally change a plan for a given individual. You have small children. You are close to retirement. You have disabled children who will need life time care. Your state has limited homesteads. There is so much information required to give a proper answer that it cannot be discussed in an open forum like this. No one entity is a cure all. It takes a combination of various entities set up in different ways to provide what you need.
I am in the process of setting up something like this. I am in Arizona, where LLCs and LPs appear to be limited to charging orders by creditors, however I’m sure with the right money & time, this can all be pierced.
However in the real life world of property rentals, I’m in the same boat as the original poster. I need a structure in place that can make aquiring more property straightforward since analyzing deals, financing and finding tenants is enough work for me.
I’d love to get some feedback from the gang here. I’m thinking of a Limited Partnership with my wife & I as Limited Partners, and a LLC as a GP. The LP would then be the single member owner of LLCs that own the real estate rental assets.
OK, so now please tell me I’m a fool and blow this structure away. (Better to do this in theory than in practice of course! :biggrin)
Noob
book by Bronchick “Asset protection secrets of a millionaire real estate investor” is a good primer.
So Sue Me by Arnold Goldstein and Asset Protection by Adkinson and Riser are also good primers.
I can “second” the recommendation of Adkisson & Riser. I’ve known both for years and attended their seminars. I also know Arnie Goldstein but think of him more as an offshore specialist rather than US asset protection specialist.