Avoid These House Flipping Mistakes with a Corporation
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- Опубліковано 17 вер 2024
- In this video, we're taking a look at how to avoid House Flipping Mistakes with a Corporation.
A corporation can help you avoid some of the common mistakes that house flippers make. By using a corporation, you'll be able to protect your investment and ensure that you make a profit from your house flipping efforts. Watch this video to learn more about how using a corporation can protect your flipping investment and help you succeed in house flipping!
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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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You made me smile!! "We want to pay our fair share in taxes, but we don't want to leave a tip." Absolutely brilliant!! Cheers!
Glad you enjoyed it
I flip properties in Texas so how should this be structured to provide anonymity and asset protection? Should I set up an LLC (C-Corp) in Wyoming and have that own the LLC (pass through) in Texas?
In your example on this video does your "funding LLC" own the flipping c-corp?
Clint, could you clarify the difference between creating an LLC and having it taxed as a C-Corp, and creating a C-Corp as it's own entity?
Would it make more sense for me to use s Corp if I use cash and never plan to borrow?
Thanks Clint, what about 1031 exchanges ,can it be used with this structure ?
Great video but at 10:25 you say all the lender sees is your W2 income and they are not aware of your business. Unfortunately, it doesn't work that way. In my 30 years lending FHA, VA, CONV and private and hard money loans, if you own more than 25% of any business LLC or C-Corp, you are considered self-employed (even if you pay yourself a salary) and you must provide 1120's etc .... You can't hide the business from the lender. However. if you borrow private money they frequently will not ask for business tax returns and the same goes for some institutional hard money lenders.
What if you are doing it with partners? Would you have the subsidiary be taxed as a partnership and the holding company as an S-Corp?
How is this different from an S-Corp? And, what if you are only doing it part-time?
Clint: When you pay yourself a salary from the Corp after selling a flip, should the salary run through a payroll company for tax deductions before I receive it or is it gross and taxes at the end of the year? Thanks
You should pay withholding at the time you are paid out of the corporation. This will help you avoid tax penalties and also helps you to not spend money you need to pay in taxes.
Do you set up the holding LLC as a corporation as well? Do you also draw a salary from the holding LLC?
Jason Perez did you ever get an answer for this?
I need this answer lol
Clint: I flip several houses a year and my only concern with the strategy you teach in this segment is this: If one of my sold flips later resulted in a litigation (for whatever reason) against the corporation that sold them the property, then all properties currently held by the corporation would all be encumbered by the litigation. How would one avoid this scenario? Thanks!
By setting up a Series LLC
Why would you be sued? The property is not yours anymore. The lawsuit has no merit years later. Right?
what if i want to do wholesaleing what should i file it will just be me i will not be rehabbing
Took him 3 years, but finally gives the answer. ua-cam.com/video/qyZKgdc3WcU/v-deo.html
Brilliant!
Agreed
Clint, Great video. What if I'm using a HELOC to purchase the properties 100% for my flips ? The HELOC is the only lien since my primary residence is paid off in full. Will the lien against my private residence from the HELOC be considered a first position also affording me the same protections as if using an outside lender, say a hard money lender ? Could this scenario negate the fact that I need to set up an C-Corp and instead use a traditional S-Corp for flipping. Not sure if the new tax laws in 2018 will give me the tax breaks a C-Corp will anymore..
Clint what about employee tax? doesn't it mean that the corp will have to pay payroll or employee tax? Also, won't I have to pay tax on the 60k I write to myself from the corp?
Couldn't you set up an LLC for the purchase of the property, fix, and sell, then dissolve the LLC? oh and the LLC would be member managed by your existing C-corp. Thoughts?
Yes you can.
I'm in Illinois. The New laws state you can only wholesale 1 deal in a 12 month period WITHOUT being licensed. JV's, double closing, or flipping doesn't "elude" the rules. What if I structured the deals in a Land trust (Wholesale trust) Is that a work around?
I don't believe so. If this is a strategy you plan to pursue contact a local attorney for an opinion then please share it with everyone on my channel.
I am amazed with the content in this video! you talked about exactly what I was looking for. I am from Toronto and I would like to open a C corp to flip Pre-construction projects. Now I know it's possible! Could you make a video applying this process but to flipping a Pre-construction property instead? I believe we don't need to create any LLC for this case since the property will be assigned months before the occupancy date so you don't have any liability here. Again thank you .
You would still use a corporation to avoid dealer status. It does not matter if the flip is pre or post.
@@ClintCoons Do you know any good bussines advisor like you here in Canada? or still are you able to help me. ?
@@jacobocelis we can help with US investments but not in Canada. I do not know of anyone in Canada.
Why do I need llc to fund my c corp? Can a c corp founder lend money to corp instead of llc? What’s the advantage using an llc in this scheme?
The LLC loans money to the corp and then can place a deed of trust against the property to secure the equity in the event the corporation is sued.
@@ClintCoons who is the owner of the llc (with money)? Who is the owner of a corp?
@@nicknameis You would be the owner of both
Clint, do you recommend C corporations for wholesalers as well?
Yes
Where do we set up the C Corp?
How can a C Corp work if you are a solo act...? I thought you CAN'T be a 1 person army(like in a LLC) as a C or S Corp?...BUT GREAT VIDEO👍
Sure you can. Also if you want to use an LLC you can elect to have it treated as a Corporation for federal tax purposes.
I have one question. if I buy a preconstruction today in a corporation and I sell the contract 2 years laters and make a profit. this would be considered active income ? or how this income would be treated for tax purposes? thanks!!
What do you mean by sell the contract?
@@ClintCoons when you do the assignment. transfer the contract to someone else or selling.
@@ClintCoons for example i buy a preconstruction today. I paid 500k for one bdr unit. after two years the building is still in construction but now my unit cost 550k . I can now sell my unit (assign) and take 50k in profits. if I incorporate a bussines for this purpose. after two years would this be considered as active income?
@@jacobocelis No but do you want it to be?
Damn that’s super smart.
Thanks 😀
Clint, I'm confused. In your video "Forming an LLC for Real Estate Investing", you say in the beginning that you think we should form our LLC to flow through into our 1040's, whereas in this video, you make it seem like we should NOT set it up to flow through, but leave it in the C-Corporation. What would be best for flipping, and what would be best for Buy-and-Hold rentals?
Excellent. Thank you for your response. Due to your help, I will now come to Anderson for all my REI legal needs. Hopefully we'll talk soon
Nate Socrates What was the response because I am curious for how I should set mine up as well.
I would assume his response was C Corp for flipping and an LLC for buy and hold . Don’t quote me on that though . I’m just guessing based on what I have learned about the subject matter.
@@jwanders10 i think so too. And both under a Wyoming holding llc for anonymity if you want that.
is this still the relevant plan in 2020, or have any laws changed since this video was created?
Still recommend you flip though a corporation with an LLC holding the flip property. I have other videos covering this strategy.
how will Anderson help me stucture my corporation so IRS will not challenge the amount of money I will pay myself through salary and bounses.
i need to talk to you are you n mass ?
We all want to pay our fair share in taxes but we don't want to leave a tip. Word from the wise ⬆️!
Why C Corp and not S Corp?
You can use an S-Corp but the activity will flow down onto your personal return and lenders will know you engage in flipping activity.
Ok thank you! One last thing. That wouldn't be such a bad idea if I'm just starting the business and wanting my income to be more so I can get approved for loans?
WoW 🤩
the info is good, but the fit of that suit....
Hah! You are very right.
Ever notice that Clint wears horrific ties? 🧟♀️
Ouch - I will let my wife know she needs to do better. in picking out my clothes. :)
Lol bad advice
Hmm! What do you suggest?