I would like to start investing and flipping properties in DFW area in Texas. To limit the liabilities from rehab and contractors, I was thinking to hold all titles on LLC that I register with sate. Is this a good idea?
Also, I will need financing from the lenders/banks. How does this work when I tell them that I want to gaurentee the loan personally, but hold the title on my LLC name? Do they go for it ?
There are no significant differences between LLC and S/C Corp with regard to taxes UNTIL you are making a LOT of money. At this point, the plan changes.
There ARE significant differences between the amount of administrative hassle required: Corps require annual meetings, resolutions to buy things etc etc. lots more paperwork than an LLC.
There are MAJOR differences between LLC and Corp with regard to asset protection. These are general guidelines that apply in TX and NV, I would assume most states to be similar, but that’s the disclaimer.
Both entity types effectively protect you personally from liability arising from within the entity (landlord gets sued).
However the difference is what happens to the entity if you personally are liable (you rear-end someone in your Pinto)
Ownership of corporate stock is an “investment” whether it’s IBM or Joe’s Real Estate Co. Investments can be ordered transferred to satisfy a judgement in court. This would make your adversary owner of your corporation and all the assets it owns and controls.
Ownership interest in an LLC is considered “personal property”. as such it is not available to satisfy judgements, effectively isolating your company from your personal liabilities. A very significant difference.
It’s hard to cover all the details in a forum format, but let me know if you have any more questions.