Should You Get an LLC For Your Real Estate Business?
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- Опубліковано 14 чер 2024
- Should You Get an LLC For Your Real Estate Business? Maybe... maybe not. In this video, Brandon Turner, host of The BiggerPockets Podcast, shares the dirty detail on what an LLC is, what it isn't, the pros, the cons, and even what you can do instead.
Glad I watched this. Solid information.
About to turn 40 and we are in the process of buying our first home.
Following up by paying off all other debt and then buying investment properties.
Starting late in life but better than never.
No, you're not late. You're on time, buddy!!! BTW most millionaires became millionaires in their 40s and 50s🎉
Only graham tells me to smash that like button
Straight facts
On god bro
Facts dude
YES KING
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As an attorney, I would recommend getting an LLC.
Well, you make good money doing it. Pretty much assumed you'd push LLC's.
As a mechanic I recommend getting the blinker fluid changed regularly
As a Sales person I recommend you finance a $100,000 car at 18.99% APR meanwhile you only make $40k a year 😏
@@dairysmoreta6108 Sir, an individual can form an LLC on their own without hiring an attorney. It’s simplistic.
@@dairysmoreta6108 Brutal LOL
Really enjoy these kinds of videos where you talk through a specific subject instead of broader overall subjects
"Talk to an attorney" is a great answer. Thanks Brandon.
Generally, LLCs can procure financing with a loan guarantee from a member. I would suggest gathering all your questions, then sitting with a CPA and Attorney for a hour to get all of your questions answered. $500 investment ($250/ hr 2x) for a solid foundation for years to come.
All the best,
A CPA who invest in real estate
Robert Clark I read your profile. I’m a veteran, 90% service connected, in Miami Florida. I’m currently in the process of searching for a great lender to fund my initial investment. Contact me.
i say, get an llc as a property management co, to market your properties, collect rents, hold cash, and hold your property in your name. get an umbrella policy to cover yourself. evictions and loans are easier when property is in your name.
I'm confused.. So is it recommended to have the property under your name directly or the LLC? I noticed you mentioned an umbrella policy to cover myself. would that be for if property is under my LLC or my name.
I think the IRS might have an issue if the LLC is collecting rent as income without having any assets that produce said income. If the LLC is the one invoicing rent, isn't supposed to collect and pay sales tax on each payment?
@@markpatterson8208 in the beginning stages, you are your business, it doesn't matter how many llcs, corps you have. any attorney and or judge would see through your little operation and sue you personally. although, he is correct, it starts makes sense when your portfolio is substantial, lets say approaching $200k in value, beyond any liens and insurance limits. if you have mortgages on those properties, then it doesn't matter lol.
@@kewlace I'm pretty sure the LLC would just be a Property Management company which doesn't need to own assets to accept checks from tenants.
@@kewlace no, that is incorrect. The IRS doesn't collect sales tax. Rent isn't subject to sales tax in any state that I know of, and depositing rent checks on behalf of property owners is what every property management company does everyday.
Great content. Ive subscribed and I love your candid discussions. I appreciate your content.
Fantastic content guys. Your videos are VERY relevant and super easy to consume. So many question I have a new investor you have addressed in full or at least in part in one of you videos. Thank you!!
Wow. Easily the best biggerpockets video I've watched
This is an old video, but I have had several hard money lenders say they only lend to LLC owners. So I've considered getting one for that reason. Just to have more options.
This was VERY helpful. Thank you for all the great, informative content!
SUPER helpful content!! Thank you so much Brandon.
Wow you answer it perfectly for me!!! Thanks Brandon!!! You are truly a blessing I truly his world.... you do deserve the wealth.
What you sow it was you shall reap!!!!!! Thanks!!!!!
Good video Brandon, thank you. Answered some questions I didn't have!
Simple and straight forward. Thanks much.
Boss Brandon, you the only reason i joined BP, you inspire me a lot!. you are awesome, youre much better than other host in bp webinar. i like you the way you discuss, very specific.
Perfect timing on this video. I have been working on limiting my liability this week. 😁
Excellent VIDEO. Learned a lot. Thanks.
Very helpful and informative video, thank you!!
Thanks very much for such informative video. It answer all my questions, now I know what direction i will take.
Crazy because I actually use an LLC to start taking action... as soon as I make my investors know that an LLC has been created it creates that sense of urgency to start moving the money into an investment!
Great information and easy to understand. Thank you.
This may be the best LLC video out there 💯
Great video. I’ve been reading a lot on LLCs, and this summarized many hours of research.
I second that!
OMG!!!! I've been struggling with this question in my head and researching and feeling stuck. Thank you so much for answering this question.
Super helpful. So many questions and concerns validated.
😂
As for me, I always run my ventures through an LLC. I love commercial real estate because it allows me to use leverage while providing me the protection of an LLC without triggering the due-on-sale clause.
How do you not trigger it
@WESTERN NY BIGFOOT llc is allowed on commercial loans, just not residential. even if said residential is a multi family complex, it's still considered residential. you can't get a conventional loan on residential if you have an llc set up. If you obtain a conventional loan first THEN set up an llc, then you are transferring title from you to the llc. so the lender will call your loan. unless they choose to let it slide, which does happen if you're lucky.
Or, from the start you could get a commercial loan on your rental property if setting up an llc is important to you. but commercial loans have higher fees and shorter terms.
Or, you could just buy a commercial building and obviously get a commercial loan.
The moral of the story is, if establishing an llc is not really beneficial to your situation, then you don't need to jump through hoops to set one up. if all you're concerned about it getting sued by your tenants, then just get good insurance. especially if you own your property outright.
@@ChristianC-gy1yma couple things. 1. you can get a 30 year fixed conventional loan for a rental through an llc, but rates will be much higher. 2. banks often don’t call the loan if you transfer it to an llc, but the can.
@@MacLaw3084 Most big lenders will not give you a conventional loan through an llc... But some would, yes, at higher rates. yes, I mentioned they CAN call it, though they don't always. But that is a risk investors will need to take and not worth it in my book.
simple yet accurate explanation
Thank you ,, this is Great ... LLCs and incorporating them could be and are very confusing . Especially for me . So many things to consider what exactly will it be used for etc... thank you for the insights!!
Great topic to touch on!
You da man Brandon! Thank you for making this content!
Great job Brandon You killed it 👊
Excellent video, thanks for sharing all this information.
Thank you for this video Brandon!!
A business entity is needed for hard money loan under 100k in MN, so that's why I set up a LLC.
That’s not true
Amber Kay sorry, I should clarify. Llc is needed for the hard money lender that I work with here in MN. Not sure about other lenders, just the one I work with.
I’m able to qualify for loans much easier for a rental property in Mn here with an llc.
Awesome vid as alway Brandon! Cheers bro 👊
Good Day, and Thank You!
Thank you so much for your information. It goes so far... Maybe not monetarily for you but it does go far!
Own the property yourself and "lease" it to your LLC. When the LLC is sued only things that the LLC actually owns can be up for grabs. The property does not belong to the LLC. You do a "triple net lease" for the property which makes the LLC responsible to pay all expenses related to the property as well as make the "lease" payment for the property to you out of profits. With that in mind remember that you are always responsible for your own torts. I.E. if you personally do something that causes harm etc to the tenant then of course all your belongings are up for grabs anyways. Always be properly insured and never over capitalize your LLC. I.E. if you want to invest cash into your LLC always "loan" it the cash, or as much as the government will allow you to. Something like if you put 100k in loan 80k and invest 20k. Then in the advent that the LLC is sued you only lose 20k as the LLC has to pay you its "creditor" the 80k back. Also see a lawyer/cpa before doing anything as the law might differ where you are.
Whoa that's the best advice sense I heard about an LLC
This is a great idea
Most likely won't work.. It can be easily pierced because you own the LLC
Good info. Thanks Brandon
Good info, and to the point. Thanks
I jiust watched and have one shortcut recommendation. If its just one property you're seeking additional protection for and you have a personal umbrella insurance policy, you should be able to place the homeowners under a personal umbrella. This likely wouldn't work as you scale up but is good for someone starting off.
Thanks for the info.
Based on what you said about leverage being high as a beginner and making sure everything transfers smoothly at the bank, I believe the answer here is to proceed with caution and eventually the time comes when you have more equity or go for another rental that you want to set up an LLC. Since you clearly stated it is not required to begin.
Amazing video. I’m not making any excuses!
Thanks very informative
This was wonderful!
Valuable info....thank you so much!!!:)
Thanks Brandon, real info here
I love you man!! thanks for your guidance!!
Great summary of pros and cons. Mahalo! “🤙🏽”
Fantastic information. Thanks.
Good advice. Thanks.
Sounds to me like I need to talk to a lawyer, but if I had to guess, when buying residential put the property in my name and make sure I have super insurance. When buying commercial set up the LLC and have super insurance. Sounds simple to me.
San Antonio has some good beans... and good investment properties.
haha i thought of that too "smash that like button". awesome video though I did as a matter of fact, smash that like button as this guy is a legend and is helping so many people learn about real estate and get motivated. Thanks Mr. Turner!
Awesome you included the leverage as a liability shield. No blood in the water that way.
Great video, love you guys
Thanks, can you talk about using LLC with self directed ira?
I don't know if other states do this, but there is a pretty good incentive in Kansas to get an LLC, as there are not state income taxes for the individuals that own the LLC. This goes for any pass through entity in Kansas. So if you're saving more in taxes than what the LLC costs, it can be a good idea.
Pass-through means that the income from the entity is reported on your personal tax return. That is IRS code. All states allow income from LLCs to pass through to your federal personal return. States that have income tax allow for pass-through treatment as well.
Great content as always!
much appreciated work
So good man! I love you!
Great advice real talk
Great job!!
Awesome thanks 😊
it can be a lot easier to obtain some types of financing (particularly your standard residential financing) if all of your income is reported within an entity like that, as it becomes a singular income source with a historical average instead of numerous individual purchases/sales.
Good point, I’m highly leveraged. So with heavy insurance I feel like I’m good to go.
Each of my properties has an LLC and I have a umbrella insurance coverage as a back up to protect assets. It costs less than $200 to set it up and transfer the deed.
Don't use a Quit Claim Deed. You will blow up your title insurance if you don't transfer title properly.
Great overview.
Zoom in, zoom out, zoom in, zoom in, zoom out, repeat.
Straight badass effects. Award winning.
Lol so true. 😆
Now I can't unsee it.
OMG it is driving me crazy.
But only partly lol
Excellent video
Great video!
After Watching this I got to step up my game!
Awesome vid. Thx
Great info
thank you so much
An umbrella insurance policy may be enough for most people with multiple properties.
Love your vids!
I missed a call from Olympia, Wa. This morning. Was that you? LOL
D. J. Langehennig me too.
Cold beans is killing me!😂😂😂
Thank you 🙏🏿
Just want to add to your point LLC's give you the abilities to gain business credit to grow.
Ding ding ding! Why doesn't anyone talk about this!! A friend of mine recently schooled me on this subject of corporate credit. I want the LLC for the credit! Let's talk more about this!
And be sure to take out a business credit card and pay all related business expenses with it to further build your LLCs power.
@@fulldoseofdave2505 Do you seriously think you can just go ahead an open an LLC to fix your fucked up credit? Lmao every broke ass idiot lives this dream. Let me wake you up: It doesn't exist. 99% of the business credit cards you'll apply will want your ssn as the personal guarantor. Yes, you can get some credit lines from Shell or Loews or Home Depot etc but it will take your years to get to that level that will provide you decent credit limits you need to rehab a property. It's much easier and faster to fix your own credit instead.
@@bluerabbit1236 who said I wanted to fix my credit and furthermore who said I was broke? Why are you mad at me? Lol calm bbn it down meow
@@bluerabbit1236 you sound mad as heck 🤣 😂. Seems someone bent you over and smashed way too hard.
1:23. Press that a few times
No cap
Great video 👍
You could ask your insurance agent if an umbrella is right for you.
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Great video
Some state jurisdictions require a single member LLC to file a return (I.e. CA)
Im glad I watched this
In California there is an annual, at tax time, flat fee of $800. My CPA told me I could get a lot of insurance for $800 per year.
good idea, im thinking to ope a land trust for anonymity and get umbrella insurance, and good insurance in my cars too help full coverage the max coverage i can get
The name of your Cali CPA would be helpful... And a contract number.
California charges $800 a year FOREVER. Get the insurance.
A lot of people do hide behind the LLC question as an excuse of not getting started. Totally agree. This was great info.
Ryan Fagan I have no llc and I own thirteen properties and $2.5 million in equity. I was too busy buying properties to make llc and just quickly got insurance
@@MetalBum Do you have $million for each rental and did you ever think to open a land trust for anonymity?
I don't see how... It's only a couple hundred bucks... If you let such a tiny obstacle stop you then your probably better off in mom and dad's basement.
If the tenant sues for falling on snow and you have a management company that was supposed to shovel the snow could you sue the management company?
Can you do a video on how to pay yourself while wholesaling.
Sometimes a simple personal umbrella policy is the answer
This is an amazing video, how do you get a property under contract through an LLC??
“Eating cold beans” is the new “watching dancing with the stars”
cold beans "under a bridge", "with the pigeons"!!
What ever happened to "eating government cheese... In a van, down by the river!" ?
...or like avocado toast.
DOPE CONTENT!!!
"It depends"
This is great
What about when utilizing business credit... ? It would be a way higher loan amount (10 - 100 times larger) than personal credit loans... utilization is taken as a good thing and they are non secure loans...