First let me say this is a GREAT forum. I can’t believe all that I have learned just by reading here in the last 3 hours or so.
I am planning to start a real estate investment company in Tulsa Oklahoma next month. Until I started reading these boards I have decided on forming as a C Corp, but now I think perhaps an LLC would be better. Please tell me what you think.
The purpose of the company will be to purchase, fix up and resell (at a profit of course!) real estate in the Tulsa area. The primary investors will be myself, my husband and my mother. My two minor children may also invest a small amount of money. My mother and I will run the company, though I am going to be primarily in charge as this will be my full time gig (my mother is employed elsewhere full time). She will participate in decisions such as what properties to purchase and will also help with some design aspects, particularly landscaping. Hubby and children will not really participate in the running of the company. The company will pay me a salary.
I prefer to have the company taxed as a corporation. We do not plan to take much in the way of dividends (pretty much only paying dividends to our passive members such as my husband and children). We want to keep reinvesting the profits into the company.
*I want to protect US from the debts/liabilities of the company and the company from our personal debts/liabilities.
*I want to have control over how much income I have (e.g. through setting my own salary as manager of the company)
Given the info above, am I correct in thinking that an LLC would be better for this company than a C Corp?
If we set up as an LLC, buy properties outright for cash or use hard money loans specific to each property and only keep properties a short time (we hope!), is there any point to putting properties into Trusts? Can we even put properties into a trust when buying them with hard money?
For asset protection, would it be better to put our personal residence into a Living Trust or a Land Trust and have the LLC as Trustee? (or have I REALLY confused myself over the purpose of Land Trusts)?
Not really relevant? But, I have been very lucky in that I have never been sued. No car accidents, no trip and falls…but when I think about it…My husband and I together drive at least 40,000 miles a year, we owe a dog (a rat terrier) AND three horses [can you say “attractive nuisance?”]. We attend horse shows with our horses, where people [including utter idiots and small children] do their darndest to feed their fingers to our horses…our horses are sometimes stabled overnight at show grounds…and I’ve seen folks just let themselves into stalls of horses that didn’t belong to them (not mine that I know of). We also have a teenage daughter who will be learning to drive soon.
All in all, it is probably just a matter of time. I really don’t want to lose my business, or home, etc because someone gets injured by one of my horses [I bet the courts pay big for severed fingers?], or because one of us gets into a auto accident…
Christine