correct me if i’m wrong - purchasing a property in your own name and simply “tranferring” deed to LLC violates DOSC’s for just about…what…95% of mortgage contracts these days?
so be careful with that.
each entity such as an LLC or Corp - offer many different advantages - you must first have a few things before you do anything:
YOU NEED A PLAN
going about any kind of investment path without a plan is like…oh i don’t know, the modern day 401k - i mean, with a 401k - you have some kind of plan:
a. aggressive…moderate aggressive…moderate…moderate conservative…etc.
b. you have financial institutions handle mutual funds which you then have you money somewhat aimlessly invested in a plethura of different companies
you can call this “investing” - but what ballgum - what you’re referring to is a whole other ballgame.
you’re talking about going into business. you’re talking about creating a business and making real estate the focal point. the real estate you buy and the business you make around it, will become your asset.
so if your business is buying, fixing and selling real estate - if you plan on doing this more than 2 times per year - your CPA should be able to discuss your best options for a business entity (most likely a Corporation because of the nature of this type of business).
if you’re business will be buying, holding and renting…then your CPA will be able to explain the benefits of an LLC.
you kind of have to recognize…AT A BASIC LEVEL…what you plan to do.
If you are just getting started, I would just buy the first property under your name unless you see a lot of risk and/or you have a lot of personal assets to protect.
After the first property, and you still want to continue purchasing, then start investing more money into asset protection and such. You don’t need to register a LLC/Corp to deduct business expenses.
Yes, well I’m trying to get my plan together now. My plan up until this point has been to start with a few rental properties and maybe flip some after I understand more about how to get around the 30% tax you have to pay from flipping. My goal / plan is aggressive. I basically am giving myself a few months to get up to speed and educated before getting into investing hardcore (at least that’s what I want at this point…). I don’t plan on doing rentals forever. I want to move up to apartments, land, commercial eventually. I just thought rentals was a good place to get started and get my feet wet.
Would you guys say that rentals or flipping would be the best place for a beginner to start? My feelings are that in Dallas, TX where I’m located is that flipping may not be very profitable but less management/maintenance and rentals would be more cash flow but require more of my time to lease, repair, and manage in general. One question I had was, when I start building more and more under my belt (for instance 10 rental properties), how do you manage all this at one time or is it better to bring in a third party company to handles this?
So that’s the PLAN as of now. I’m just new to this and need more knowledge under my belt. Any thoughts? Anything I should consider before starting LLC or before buying property? Anything that might help me when getting started??
Starting ANY business is a lot of work and constant hassle. Whether you choose flipping or rentals, neither will be easy.
Ten rentals may seem like a lot when you are first starting, but it is small compared to the number of rentals you’ll need to live on. You can easily manage several dozen rentals by yourself including doing all the maintenance. There just is not that much routine maintenance or management to do. I find that most of the time is spent preparing rentals after tenants move out. Many tenants are hard on rentals and the units will frequently need paint, carpet, and other items.
The best advice I can offer is to understand the NUMBERS. Whether you’re flipping or renting, you must understand how you’ll be paid. For rentals, the most important thing to consider is real world cash flow. With flipping, you must understand what you are really making with each deal and how the taxes will affect you.
Great, thanks!! That was what I was looking for. I guess it doesn’t particularly matter which way you get in, as long as you get in!
The plan I have eventually will hopefully get away from rentals and into bigger investments and more money.
Can anyone recommend a good cpa (who also has decent prices), for TX real estate advice and to do my taxes? I got a referral for a cpa from a friend, however I’m not sure if he knows anything about real estate. Any advice or recommendations for cpa’s who “know the ropes”? This is the first step, so I can get my business established and organized.
