When Is The Right Time To Create A Management LLC For Your Real Estate
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- Опубліковано 7 чер 2024
- Today we are diving into when is the right time to create a management entity for your real estate investments!
Which Entity Does My Property Manager Pay
👉 • Which Entity Does My P...
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Clint Coons, Esq. is one of the founding partners of Anderson Law Group, Clint has grown his legal and tax firm to over 400 employees by assisting real estate investors with creating and implementing solid entity structuring plans. His success in these regards is in large part due to his personal investing experience. A successful attorney, real estate investor, and speaker, Clint has used his innovative and dynamic strategies coupled with knowledge borne from experience to help thousands of people save millions of dollars and build real wealth.
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The information provided in this video should not be construed or relied on as legal advice for any specific fact or circumstance. Its content was prepared by Anderson Business Advisors with its main office at 3225 McLeod Drive Suite 100 Las Vegas, Nevada 89121. This video is designed for entertainment and information purposes only. Viewing this video does not create an attorney-client relationship with Anderson Business Advisors or any of its lawyers. You should not act or rely on any of the information contained herein without seeking professional legal advice.
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Thanks Clint, this really helped.
A huge mahalo for your knowledge and "hypothetical advice". Ive learned quite a bit about various options and possible reasons to pursue those. Thank you graciously.
Wonderful!
Was just watching the series LLC video and the breakdown
Can u make a video of borrowing from life insurance policy. Theres other videos out there but Your explanation are so easy to understand. Thanks
Awesome idea. Will do.
Great VIdeo!
Thanks!
Loved the video. And if you been following Clint you would make sure the property management entity doesn’t own any real estate
Correct!
why?
Great video. With a property management LLC what is the proper way to flow the cashflow for distributions if there is also a holding company LLC? Should the holding LLC own the property management LLC, and all distributions be taken from the holding LLC?
No you will own the PM LLC. The PM LLC will not typically make a profit because you will expense any profit out - assuming you are treating it as a C-Corp. If it is set up as a disregarded LLC then you are most likely not looking for tax strategies but just separating the management from the ownership.
Good video Clint. Is there a scenario where you utilise the C Corp to increase the loss on your personal taxes and use that loss to increase the amount of capital gains with a 0% CGT? For example, you increase the losses (from reduced personal income due to C Corp + very large bonus depreciation that exceeds W2+ property income) +$80k (mfj) to remain in the 0% CGT bracket? Potentially then use that increased headroom for a flip or to sell stock that has gone up in value.
Yers the management fee is a deduction to your rental income thereby lowering the taxable amount flowing to your 1040.
Thanks so much for all of this great information! Would it make sense to have the PM llc owned by the holding company for the purpose of anonymity? For instance: a discruntled tenant angry at me for evicting him could easily find my name on the state site.
No benefit because you are self managing and it will impair you liability protection.
Great video Clint! I have one property and set everything up for anonymity. My wife’s sister lives in another state, but she has a property in the area where we live. She wants us to manage it for her. Would it make sense to create a PM LLC, or just have the tenant from her rental send checks to the our holding LLC?
I would not have it sent to your holding LLC. I would either perform the activity in my own name or through a PM LLC.
Hi Clint, question - does the property management company need to reside in the state the properties are in? Do you need to do anything differently if you are using the PPM to manage properties in other states?
Yes to the first question. If you are using a third party PM then your personal PM does not need to be located in the state where the properties are located.
Not sure where my first part of my question went re: C-Corp property management company distributing the rents back to my 9 separate rentals, flowing through my Holdings company? Do I leave the rental income in the Holdings or go one more step and transfer rental income to our Revocable Living Trust? Which way is the best to structure the cash flow to reflect best, so my income tax will look great in 2 years and be bankable/lendable for my next buy & hold? As I understand the C-Corp as the Property Management Company would be the best way to go & not an Entity LLC?
Thank you for your assistance 😊
You want the rental income flowing to your 1040. If you have your own PM entity and you want to look the best to banks then do not take a large management fee from your rental LLCs. You want as much income as possible flowing through to your Schedule E. The PM entity will not own the properties nor will it keep the rental income.
Great video! I'm an out of state investor. Does the PM company need to be created in the state where the properties are located?
Yes it does or foreign filed in the state where it actively manages the property.
This is a good video Clint I have a question
What if I have a third party managing my properties but I have the money sent to my prop mgmt llc?
Take a look a this structure
Holding Company (Wyoming LLC)
OWNS
Mgmt Company (Wyoming LLC)
OWNS
TX LLC , FL LLC , OH LLC
(All rent from the TX, FL, OH LLCs get sent to my Wyoming Property management LLC. But a third party is managing them all? So I can have just 2 bank accounts. A holding company one and a main Property management one.
I think that works.
Great video!! If management is structured under S corp, does each rental nedds to be held under LLC, or it is okay to be held by the individual person (i.e. without LLc)? Thanks!
You want the LLC to protect yourself in the event of a lawsuit so yes you need the LLC.
Is it a good idea to let my management company collect my lease earnings? And just leave enough in the real estate entity for taxes and such? I have commercial real estate. I’ll have my holding company hold both…. Thanks!
Yes you can use this stragegy.
Would the property management LLC be set up as member managed or manager managed?
Manager managed
what if I want to keep identity from tenants but ALSO save on my taxes by taking 100% dep on my business vehicle I use to do property management activities in my property mgmt llc? would I still go C corp or disregarded single member llc?
If you are using the vehicle 100% for business it is deductible. If not then just take a mileage deduction. Many times the mileage deduction can be more than deducting a business vehicle.
Could an S corp be used instead of a C Corp with similar results
Yes
Hi, I recently put my house in a land trust, recorded the title in the name of the trust. I set up a LLC, then did the assignment of beneficial interest of the trust to the LLC. For my home owner insurance, should it be for the LLC or in the name of the trust? If it is for the LLC, then the lender would find out that it is in a LLC, then what do I do? If it is in the trust name, if something happened, would I be covered if it were the LLC that conducted the business? Thanks for your help!
This is my vacation home initially and when I borrowed the money, it was for second home. I didn’t end up using it as much, so I convert it to rental property.
Your trust would be the named or additional insured under your policy.
Thank you!
Can my first property be in a holding LLC if i plan on buying other properties ?
Yes but I prefer not to.
Can you use an SCorp management company to manage several DST office buildings where I own about 1% of them with other investors? The properties are managed with their own management companies. But can I use my own management company to manage my portfolio? I’m in 4 DSTs with 7 different office building addresses. My portion of the distributions is $140,000 a year.
Are you asking if the S-Corp can manages the DST or just your portion of the income? If the DSTs are professionally managed then I do not see how your S-corp will fit in.
@@ClintCoons My portion of the income?
How can having a Management LLC to reduce taxes, don't we have to pay taxes on the management LLC's income?
The idea is to expense out the money so it is deductible to the management entity and not taxable to the beneficiary.
What if it is my first investment property and i don't want my tenants to know that im the owner?
Set up your LLC with anonymity and do not disclose you are the owner - merely the manager of the property.
Clint, This requires a part 2 video because you left out the best pro tip of them all. Some say you might Set it up to siphon money out of the LLC if you ever lost a judgement; so you never take a distribution (that would goto your creditor), but rather to a said management company
You just did. Great point.
Hi clint I have 7 properties and my accountant told me to open a management company to help reduce taxes - he says to allocate X amount from each LLC rental to the management company, but how do I pay my self from my management company? Do i just take a draw from it like i do from my rentals ? do i still get the tax benefits that way and if do can i charge my LLC with extremely high management fees to pay less on income tax ?
No benefit to paying the money to the management entity then taking it back out as income. The money should be spent on tax deductible expenses that you would ordinary pay for with after tax income.
@@ClintCoons thank you for the quick response that exactly what i was thinking just wasn't sure
how would someone name their property managment company and still remain anonymous to the tenants????
You wont be anonymous to the tenants if you are working through the PM. The anonymity deals with ownership not the PM side.