Creating an LLC to flip properties and the benefits

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Many savvy real estate investors have taken advantage of low home prices and a large inventory on the market. They buy properties and fix them up, then sell them for a profit (also called ‘flipping’). This has become a popular way to invest in real estate. If you are going to make a business out of buying and flipping homes, you should go ahead and set up an actual business. Establishing a LLC provides you with many benefits, namely the protection from liability or lawsuits that can occur when you own several different properties.

Think about the potential risks you incur when you buy a number of properties. You cannot be in all of the houses all of the time. Someone could slip and fall on the sidewalk or get hurt while on your property. If this happens, the homeowner (you) will likely be held responsible and might even get sued. What would you do if a child wandered over to one of your properties that has a pool, and fell in? There are countless “what if” situations that can drive you crazy and keep you up nights when you start to invest. If you are not an established LLC, you will be held personally liable for any expenses, liabilities and lawsuits.

Protect your personal assets by establishing a separate legal business to manage your property investments. Check with the laws in your state to make sure an LLC can enter into contracts for real estate. When you allow your company to buy and flip the properties, the company will also be the party hiring workers, reviewing vendor contracts and ultimately selling the property when it is ready to flip. It puts some distance between your personal bank accounts and all of the business activities that are involved in buying, selling and remodeling investment properties.

Talk to a law

yer and a tax or accounting professional before you form your LLC. While it is easy for anyone to write articles of incorporation and get themselves established, having professional help will ensure you are compliant with any state and local regulations that govern small businesses.

An LLC or a limited liability company allows you to remain flexible, unlike an established corporation. While the LLC is recognized as a separate business entity, the IRS will not require any separate tax filings. You can decide whether you want to file your income taxes as a corporation or a partnership. This allows you to take advantage of your LLC status without giving up all the income privileges of investing in real estate.

If you are only investing in a single property, you might not think it is worth it to form an LLC for that single house. However, if you are planning to earn a long term income stream, and you intend to buy several properties and manage the remodeling process, having an LLC established will protect your personal assets and provide you with a more secure and legal foundation from which to do business.

This post was written for Wholesaling Houses 101 by Stephen K Hachey. Stephen is a Orlando Real Estate Lawyer specializing in loan modifications, short sales, foreclosure and much more. He is also the owner of his own practice, the Law Offices of Stephen Hachey, PA. This article is for general informational purposes only and does not establish an attorney-client relationship. Please contact a licensed attorney in your state of residence. For more information on our services, please visit our website at www.floridarealestatelawyer.org/.

Building Rapport With Sellers: Winning Sellers Over With Kindness

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These tips has been some of the best advice that I have received in a LONG time far as dealing with sellers. Apply them and your business and buckle up as deals start flying your way.

 

Are You Jack Of All Trades, Master Of None? This Probably What You Are Missing The Most…

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This is the same with all of us at some point. Watch this blog that I created as I talk about how most beginners either remain as beginners and some even end before even getting started at Flipping Houses. Learn how you can avoid the same for yourself and achieve financial freedom through Real Estate Investing.

Let me know your thoughts and how you can relate to this by leaving your comments below. :)

“STOP” Learning…

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As infants, we’re presented with a strange new world to discover. And with nothing else to do, we dive in headfirst, devoting all our time to learning how to use our five senses. At first we appear completely hopeless, not even realizing that our arms and legs are parts of our body. But soon enough, we start figuring some things out.

As wholesalers, the city is our classroom. First we learn we learn the basics like how to find GREAT deals, how to find cash buyers, how to close deals and how to get paid. Not to mention learning hundreds of tricks of the trade along the way. We get more experienced and learn about Subject 2, buy and hold, hard money lenders and private money. Every day we can look back on ourselves the day before and be amazed at how much we’ve learned. As you get more experienced you notice things get a lot more specialized but we’re still continuing to learn all that we can.

And then, we just stop.

After closing one deal an enormous amount of wholesalers never read another book, blog post or consult with another person in Real Estate for help.

Watch this new blog that I created ask I speak on how you start dying as you stop learning.

What’s your “TIME” worth?

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tinaspriggs

If you’re like many Entrepreneurs or even aspiring Entrepreneurs, chances are the idea of having everything under control eludes you. Or, you don’t know where to start because you have 101 things to do during the day. After losing my mind and almost letting my business slowly slip away. I realized that I need to [...] Read more »

[Webinar] Flip Houses with NO MONEY Down!!!

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Please register for Intro to” NO MONEY” down Real Estate Investing. Feb 7, 2013 8:00 PM EST Register HERE Mike Nelson want’s to fill you in on a PROVEN Real Estate technique that has been filling TONS of average “Joes” bank accounts with ZEROS. Trust me, these are the good ZEROS. For over two years, [...] Read more »

She Knows Her STUFF!!!

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Estimating Repair Cost

Often times women are over looked in the Real Estate “Investing” arena. Well, I know talent when I see it and my guest for this week has “talent” specifically in rehabbing properties.  I meet up with local Real Estate Investor Julie Karvelis as she walked me around one of her properties that she getting ready [...] Read more »