Real Estate Investment Business Entity... Which?

General Real Estate Investing
1

I am currently doing the leg work to st up a business entity for the sole purpose of Real Estate Investing. My business partner and I have been to various sources trying to find the best one and we keep coming up with LLC’s, and LP’s. We’re still not certain which entity would be best for our business. We want to shed as much liability as possible, while gaining as many tax (especialy capital gains) benefits as possible. Any suggestions?

Also, we are trying to get our business plan together and are in search of a template to follow in order to create the absolute best presentation of our investment machine. Does anyone have such a template? I already have Default Doctor’s outline (thanks by the way).

2

The LLC and LP are treated similarly for tax purposes. With both, you can have pass-through taxation or corporate taxation. What you choose depends on your overall tax situation. For most small-time investors, the pass-through is best. LLCs are newer and have much less case law to back them up. LPs are more traditional. With the LP, you will need to name a general partner. In most states, but not all, the general partner has full liability. So my general answer is to just go with the LLC. It’s best if you can come up with more than 1 member. One member LLCs probably don’t protect you much.