The Ultimate Guide: Choosing the Right Entity for Flipping Real Estate
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- Опубліковано 28 чер 2024
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In this video, we're going to teach you everything you need to know about choosing the right entity for flipping real estate. We'll cover everything from the benefits of owning a corporation to the tax trap that comes with dealer status and how to avoid it.
If you're thinking of flipping houses, this is the video for you! We'll teach you everything you need to know about choosing the right entity for your flipping business, so you can achieve the success you're looking for. Thanks for watching!
When it comes to flipping real estate, what are your concerns? You want to make sure to cover the three legs of the stool, which are asset protection, tax planning, and business planning.
You want to make sure you have liability protection, and you want to have protection from the IRS. What is the entity that's going to provide that to you? Find out the answer in this video.
There's a certain strategy you'll want to follow and I explain it all in this short video.
WATCH NOW and please leave your comments and experiences with getting loans for your real estate deals below!
Don't forget to like and subscribe!
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ABOUT CLINT COONS
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.
#realestateinvesting #flipping
Would you like to learn more about this topic and talk to someone? Schedule a free consultation here: 👉 aba.link/8fi
You`re amazing Clint! This is pure gold information here.
You don't want me to call you because I'm too 🧠 for you scammy 😂😂😂
Thanks for sharing your expertise and experience! You are appreciated!
You are welcome.
Thank you for your advice a true success story specially taxation saving money left and right: 1031, AS IS Where is! This is the right time to start doing big money with your advice and expertise everything is so much easier, flipping with an LLC is the more appropriate way to go and open it in Wyoming or Nevada.Thank you again!
wow this is amazing right before I start my journey in house flipping , thank you so much
Victor Rodriguez
Thanks for watching.
Very information Clint. Please continue to make more, I am watching.
Thanks, will do!
Thanks Clint I was wandering about tax strategy for flipping properties you answered question I thought and issues I did not think of!
You are welcome
This was super valuable. Thank You
Iv been saving up my initial (get into the game) cash while studying my ass off over this subject over the last year or so. This video answered all my questions about the confusion of an LLC owning an LLC. My light bulb finally clicked at 9:28 lol..I just subscribed and can't wait to see what else you got. Cheers!
Perfect. Best of success.
Great video!! Thank you!!
This is the best explanation by far! Thank you!
Glad it was helpful!
That's great info!
Thanks for watching!
Awesome presentation again Clint!
Thanks for watching
Valuable, unique and practical advice from national expert! We love Clint coons’ books also! Thanks for sharing your helpful life expertise!
Glad you enjoyed it!
Amazing, ton of value in short time! Rare to fine, THANK YOU
Glad you enjoyed it!
Excellent video! Thank you!
Glad it helped!
Very information info and great presentation. Thank you.
Thanks
Thank you. I am learning so much
Excellent!
Thank you very much. Very good information.
Thanks
Thank you 🙏🏻
I love this. Great job 👏👏👏👏
Thanks
Wow, this is really good info. Thanks
Glad it was helpful!
Excellent!👌🏾
Thank you 🙌
Really cool info
Thanks
Excellent videos 👍
Thanks 👍
Great info. Thank you for sharing! Question? How would you do this if you’re flipping with a partner? How does this differ with a partnership or JV?
Excellent Content as Usual 😊
Thanks again!
@@ClintCoons I think you are exactly what I need to level up I'm going to check on your retainer fee today ! I've binged watched & took notes on so many of your videos 😍
Thanks Clint
You are welcome
👍🏻 great
That was great info. I have my company's set up just like that, but I didn't think of dissolving the LLC's after a deal. Thanks for the info..
Glad it was helpful!
Yep! The great idea of dissolving is superbly beyond imagination. It's like keep on doing the job without leaving a live trail to be stepped on. Thank you for sharing the wisdom.
Mr Coons, thank you, Sir, for the insightful information!
Q? What are your thoughts about placing a property inside an LLC with the C-Corp as the manager of the LLC and then...
replacing LLC manager with your Buyer as the new LLC Manager?
((I know this is a run-on sentence. I apologize.)
Blessings*SharonZ WA
Hi Clint.
Thank you for your videos. You're very informative and a Great Teacher.
I have a quick questions. Do you have a vid on how to properly accept funds from investors into a c.corp or how to structure those deals?
- Felix
ua-cam.com/video/bpKA2ut0Wxg/v-deo.html
Nice and great explanation.
So create a WY c corp and for each flip create a new WY LLC and dissolve it when sold.
How would you set up if you have a partner on the flips?
The Flip LLC would be owned by your corporation and your partner. If you are using the same partner on every flip then consider setting up the flip corp LLC as a joint venture. If you would like a FREE 30-minute consultation, you can request one here
- aba.link/30minSession
@@ClintCoons Thanks for the quick reply. I just scheduled :)
Mr. Clint Coons’ channel is one of the best sources for valuable education for real estate professionals! Many thanks!
Wow, thanks!
Definitely Agree!!
He does not address the double taxation someone pays on a C Corp later to get the money out. So 21% initial tax on the income and then another dividend tax (15-23.8%) to get the money out of the corp that the individual pays on their personal income. so 21+ 15 or 21+23.8. You are paying as much if not more in tax. Easier to put it as a S-corp or Partnership LLC.
@ClintCoons what if you have other equity investors in the property? Set up as LP investors of the disregarded LLC? Thanks
Thanks Clint for all the great advice . I have a question
I live in California and I’m in the process of starting a house flipping business.
would it be better to set up the parent LLC taxed as a C corp with limited partnerships instead of disregarded LLC’s?
My understanding is that with LPs you don’t have to pay the annual fee based on the income generated as you do with the disregarded LLC
Thanks!
Yes, absolutely that is another way to structure flipping in CA.
Thank you for all the Advice Clint! , I’m new to your channel and I’m enjoying your videos and learning a lot!
I have a question. Do you have to open different bank accounts for the parent LLC and the Flipping LLC? Also how do you transfer the money into the
Parent LLC after the Flipped home is sold? Thank you sir
Yes you do. After the home is sold you would issue a distribution from the flipping LLC to the parent LLC.
Thanks Clint!
Great video. Question: with an LLC per flip owned by a C Corp structure, don't most lenders in their Personal Financial Statement forms ask for a list of all guaranteed loans. So any loans in the LLCs give away the game?
Yes but if the LLC assumes the loan for you (this is internal and not with the actual lender) lenders have informed me that I do not have to list the obligation.
Hi Clint- I understand holding title within the single member disregarded LLC. Is it safe to pay for expenses (contractor labor, supplies, and renovation cost) on that property out of your operating C-corp? It can become a hassle opening multiple bank accounts for each flip. For example, if that sub contractor gets hurt and decided to sue the name on the check (the operating company/account) and not the flip entity, have I lost all protection? Just want to keep inline with investor protections and not leave the door open for issues. Thanks for your help!
If the agreement is with the LLC then the contractor should not have a claim against the corporation. It is always the best strategy to open an account under the LLC name.
I always suggest C corporations. For my customers. Besides, after a certain dollar amount of net profit is high, an LLC can pay more than 16% more in federal taxes
Katherine G.
Thanks for watching.
Unless I hold an asset for at least a year i sell. Now going to move to FLorida(no state taxes) and will be doing multiple flips at the same time. Can't you treat the properties as inventory on an accrual basis and use that as income at the 21% but pushing the accrued debt EOY against profit and then no capital gains? I already use the LLC-Corp then pay out to myself as designer through an S Corp.
Curious what you would change for guys who do this on the side and already have high W-2 income.
I might still recommend a C-Corp so you have more after tax revenue to invest (lower tax rates) and you preserve your ability to look good to lenders going forward (they do not know you are a flipper).
Hey Clint. Can't you just pay yourself as an employee in your S-corp as well and use that W-2 to show income for your buy and hold business?
Yes the income will count.
Hi Clint, what if you decide to hold the property instead of flipping it or vice versa? Should we have an entity set up for flipping and a separate entity for buy and holds?
Absolutely. You do not want to flip in the same entity where you hold your rentals.
@@ClintCoons if your intent was to flip but decided to hold, how difficult is it to transfer to a holding entity?
@@danesilchenstedt good question, did you find out? I'm guessing in that situation you could use a simple quit claim to deed it to the other entity. I will ask my attorney!
Mr. Coons, can you do a short video on reimbursing oneself in an LLC? Is it treated like a distribution?
This will depend on how the LLC is treated for federal tax purposes. Generally speaking, yes it could be considered a distribution or it is a straight up reimbursement.
@@ClintCoons It's a disregarded entity...thank you.
Hi again, should i create one entity if i wanted to become an investor and a mortgage lender, or should there be two separate entities. thank you
Separate entities.
Hi Clint, can a C-Corp that is being used to manage series LLC'S (rental properties) be the same C-Corp used for single entity LLC flips?
Yes it can
🔥
Caveat emptor in my state.
What NCAIS Code should I choose for my real estate wholesaling business? Building business credit and I want to be sure I have the right code
Did you get an answer to this question ⁉️ I would like to know..
@@tilamz6 no not yet, but I’m thinking I’m going to go with other real estate
Hey Clint, if I am flipping real estate and wholesaling real estate, is it best to have two separate entities? If so, how come? If not, why not?
No I would use the same entity. I have some new vids on Flipping and wholesaling I will be releasing in a few weeks that cover this in more detail.
Clint, if you are wholesaling using the LLC strategy after you sold your membership do you dissolve the LLC or does it not matter? I mean if the entity were to be sued there wouldn't be any assets in it anyway.
You do not need to dissolve the LLC use in a wholesale. The LLC will never own anything that will put it at risk.
So the local LLC is disregarded owned by c corp? So tax return of local LLC is combined with the c corp? Thank you very much!!
Yes but the LLC does not file a tax return.
Hey Clint, Im in California and I am wondering if I was to do this structure you have here, will I still have to pay the $800 annual tax fee?
You would need to use either a disregarded limited partnership or a Wyoming Statutory Trust.
This also applies to rental properties investing? Also, how can foreigners invest in the US through flipping properties / rental property? Thanks
Might I suggest you set up a strategy session with our firm. Depending on where you are from the strategy may be different.
Instead of using those Disregarded LLC's can you use a Land Trust or Privacy Trust the same way?
Yes but you do not have asset protection, only anonymity.
You stated the following "If you would like to use some anonymity, I like using Wyoming LLC. However, that doesn't work if you are flipping a lot in one particular state. Then you are going to have to register those LLCs in that state." Can you please explain what is "a lot"? I am currently living in NJ and I am planning on flipping 1-4 properties every year. Should I register the parent flipping LLC in NJ or Wyoming? Thanks in advance.
Based on 4 flips a year I suggest you register in NJ. If it was just one or two and you were flipping in multiple other states then you could consider a different strategy.
Is it too late to transfer the title to LLC/C-Corp after the flipping is finished but before the sale.
No it is not.
So the c corp owns the local disregarded LLC for each separate property? Is that local LLC a subsidiary of the c corp? Does there have to have some language in-the c corp bylaws? Thank you!
The corp will be the sole member of the property holding LLCs. The property holding LLCs are disregarded.
Clint, if a person sues the now defunct LLC that sold them the house, can't the buyer still look up who the organizer or member was of that LLC? Wouldn't it still appear on the Secretary of State website or another public record? If the managing member of the defunct LLC was Parent Company LLC, wouldn't that show up on the public record and the seller could sue the parent company?
Yes they could look you up and this is why we recommend using anonymity when setting up the structures. Keep in mind just because they find you does not imply you have personal liability.
is it recommended to use an LLC taxed as a C Corp? or a traditional C corp? i am just starting off
Depends on if you have significant start up expenses e.g., seminars and trainings. If you do not then I would use an LLC taxed as a C-Corp.
Great video! I am from Toronto Canada. How can I apply this but for Pre-construction flipping in Canada. ? I am planning to buy a project a do an assignment sale 6 months before occupancy.
No idea. We do not do work in Canada. Best of success.
Does it matter looking good to lenders if I can only use itin to apply for a loan?
No it would not matter in your case.
Can you set up disregarded entities under a S-Corp?
Yes you can
Question. With c-corp. Pay 21% tax and then taxed again on w-2 or dividend?
Only on dividend. W-2 is a deduction.
What are my options for financing the C-Corp? I would assume that i can not get a conventional mortgage through the corporation using my personal credit score. Do i have to purchase the properties myself and then deed them to the LLCs that are owned by the corporation? Or do i have use hard money loans given to the cooperation or take out a line of credit in my name and put that money into the corporation?
Either way is the typical strategy. You are correct, it would be very unusual for you to obtain a conventional loan.
I’m confused about this part, just to piggy back off this question, the purposes of setting up the C-corp and paying yourself with W2 is to look good to lenders? But then you can’t get credit using your personal credit score for the C-corp?
@@ivetdiaz1220 The corporations credit score has nothing to do with the salary you are paying yourself.
Hi Clint, amazing Information. In the example you are giving about creating LLC owned by an LLC, can it work if a C-Corp owned LLC’s? Or only LLC for LLC?
Yes, absolutely. That is a common structure used by flippers.
Can you do a video on a situation if someone owned a Wyoming holding company and did wholesaling, flipping and buy and hold
The holding company does not do the flipping. The holding company might be the owner of the flipping entity. For example, if you set up a Rhode Island LLC taxed as a C-Corp for flipping, you could make your WY LLC the member if you wanted anonymity.
@@ClintCoons yes that’s how I am setting it up. A CT S Corp owned by a disregarded WY LLC that does wholesaling and the SCorp would own disregarded LLCs to do flips which would dissolve after each flip. I would also have disregarded LLCs that would buy rentals from either my wholesaling LLC or other wholesalers. Solid structure?
@@wesleyniemiec6722 I like it all but to simplify maybe set up the CT main entity as an LLC taxed as a C-Corp and forgo the anonymity on this entity.
Hi. I am setting up a PA C-Corp to manage my PA LLC's as I do various flips. Would I need to hire an attorney to set up the PA Corp to remain anonymous
in case an attorney or buyer tries to find me in the future?
Unfortunately, a corporation does not offer anonymity because you must list yourself as an officer or director of the corporation. If you want anonymity, you might consider setting up a PA LLC member-managed by a WY LLC. The PA LLC could be taxed as a C-Corp; yes, you would need an attorney to set up the structure.
What’s the time limit from when you sell a property with an entity to be able to shut down?
within a few months typically.
@@ClintCoons Couldn't the buyer just go after the c corp LLC since it owned it? Or is that more difficult and you're just trying to make the lazy ones go away?
@@robertduffy5805 Yes they could possibly go after the corp under a common enterprise argument but that is more costly for the plaintiff and you have the defense that the LLC is a standalone entity.
Would you happen to know how many times a WY LLC can be dissolved if I'm doing business in only one state that's not WY.
An entity can only be dissolved once.
$1M a year is what I make also, but my CPA told me that on a C Corp if too much money is left in the C Corp could be subject to more taxation because the profits are not being distributed to the shareholders ? What am I missing ? I will rather pay 21% all day long
He is referring to the accumulated earnings tax. So long as you can justify holding the money for future business needs. You could not use this just to park cash at a lower tax rate.
@@ClintCoons How can I have a consultation directly with you?
Absolutely, as an Anderson Platinum client, you can consult with me directly. I sent you an email to set up a time to speak.
Would your structure also apply to "Flipping Land"?
Here are some videos that answer your question:
ua-cam.com/video/2kL6LfviPRs/v-deo.html
ua-cam.com/video/SA9zJVrCXqY/v-deo.html
I know someone setting up flips in an lp instead of Llc. Are there benefits to this or no?
Not necessarily unless it is in CA and the LP is disregarded to avoid the franchise tax.
@@ClintCoons Thank. Yes it is in CA. Do you have a video or article that covers this?
@@Eric_In_SF See this video:
ua-cam.com/video/pIBkhnqr8nc/v-deo.html
Would you have any bank accounts with that LLC for dispersement ?
yes
💕💕💕
Clint, for the LLC taxed as a C-corp (holding company), is it advisable to structure that in WY along with the standalone LLC's?
I would set up the flipping in the state where you live or the activity is taking place.
@@ClintCoons In essence, the C-corp then in WY for dual protection (inside/outside & anonymity) with separate LLC's in each state for where the activity is taking place and dissolving those after the flip?
Also, does the HEA 105 passed in 2017 reduce the anonymity many seek from establishing the entity in WY?
@@nicholaspiring9485 Yes.
@@nicholaspiring9485 I am not familiar with HEA 105
Are you purchasing the property under business name or as personal property?
Preferably the entity.
As a licensed real estate agent in Arizona, I have to disclose if I'm acting as the Principal in any transaction. I've been told that also applies if I'm benefiting from a sale using an LLC to create anonymity as you describe here. They can still come after my real estate license even after I dissolve the disregarded LLCs. Will this setup still be the best from a tax perspective since anonymity doesn't seem to be an option?
That is correct
@@ClintCoons Thank you for clarifying. Can I still set up a Wyoming LLC to create anonymity in states that I'm not licensed in, or are there certain states I should be aware of that may require this disclosure if I'm licensed elsewhere?
Great advice if you want to spend tons of money and time on accounting and tax prep. The only one who benefits is your accountant. Just form an LLC and dissolve it when you sell the deal. I had an S-Corp for 13 years and it wasn’t worth spending a solid 3 months a year preparing quarterly federal and state payroll tax returns on yourself as a single member owner. Never again.
Exactly
Flipping is dead as of April 2022. It is time to take down this silly video.
Does your mom know that you made a jacket out of her favorite table cloth?
😂
How can I contact you
If you would like a FREE 30-minute consultation, you can request one here
- aba.link/30minSession
Off topic ..is it normal for a general contractor to ask for this information ??
1. i need 2 personal portfolios for the the each of you / resumes with your personal info
i will fill out most of it due to i know your name and contact info
* DOB
*last 4 of SS
*place of employment,
*Time with being employed
also need at least 4 references with name ,relationship , and contact address for references
Yes this is odd unless the contractor is concerned about collecting because he is fronting a lot of $$ upfront before he is entitled to his first draw.
Good morning thank you for responding... We in Texas ..what is the best way to contact you ..we own this property for over 10 years got condemned by the city by squatters..we trying to make it our first flip and reinvest profits and make it a Realstate business flipping houses...we need guidance