LLC Benefits

I am new to DG and is really impressed with all of this informative imput. I am in the middle of Dean's book and just can't wait to get started. Thank you all for your imput, it really help and is highly motivating.

Jusett

Exquisite, I think I will follow your lead!!!!!
Thanks,

T.C. Enterprises

Just a quick post to clear up some misunderstandings regarding some taxes and marketing expenses. I am not a lawyer or CPA, but I have filled out enough Schedule C's to know you do not need an S-Corp or even an LLC to deduct expenses related to producing income. Even sole proprietors can write of such expenses. Check with your CPA.
The main reason for having an entity like an LLC is protection of assets, or separation of assets from the entity. You can put your properties into an LLC or S-Corp and no matter what happens within reason, your other assets are separated or protected. Of course all the properties in the same LLC could theoretically have judgments placed on them resulting from a judgment against the LLC. Unlikely, but possible. Again, check with your CPA.

Best of luck and keep working.

Is any of the places where you pay a fee to build up your LLC business credit any good.Or is it just a way for them to suck money out of you.

Hi wells492:
Forming and LLC takes time, ussually 2-3 months to have all documents in legal order:
From the search name form your need to sent to State Department, to searching the Legal Name of your LLC (you need to check with Sate Dep if name is available to register)Registering the Legal Name, to Articles of Incorporation to open a Bank account.
But, you can start filling and sending the name availability form to your State Department.
If you or onyone needs help, please, let me know.
Ernesto.

especially if you own rental properties; when a property is under and LLC, you protect yourself and you personal assets against any lawsuits.
In some states they have something called Series LLCs, where you can put each property under the main LLC, but in it's own 'compartment'.
If you are making money with your LLCs you will have to pay taxes to the state where you have your LLC registered, which is not really a bad thing... it means you are making money!

valerie

thank you all, very informative

You don't need to create a LLC or Corp in order to start dealing in Real Estate, just start doing deals. Once you get some deals done and if you have properties that you will be holding, then look into creating a company, the LLC or Corp will protect your assets and seperate you from them. If you are going to be dealing with hard money lenders, then you will need a LLC or Corp since they do not lend money to individuals. When you first start your company, you will want to get a DUNS number, which will start to establish credit history for your company. You can then use office supply companies, Staples for instance, that report to the DUNS to give you business credit. Also, try opening a credit card through the bank that you have the business checking with.

Why do you say that an LLC is not the best vehicle for flips and assigns? If not, then what would you recommend?

Hello all. I am growing concerned with how much talk is generated regading credit and loans. I am absolutely trying to learn to be the "birddog" type of success. I have no interest in using credit or taking on other mortgages, atleast at this point. ( I haven't recieved my book yet) I am trying to put some money in savings so one missed paycheck doesn't jeopardize my own home. Is there a better area more specific to my type of "investing" that I should be using? Thanks, Debra

Hello all. I am growing concerned with how much talk is generated regading credit and loans. I am absolutely trying to learn to be the "birddog" type of success. I have no interest in using credit or taking on other mortgages, atleast at this point. ( I haven't recieved my book yet) I am trying to put some money in savings so one missed paycheck doesn't jeopardize my own home. Is there a better area more specific to my type of "investing" that I should be using? Thanks, Debra

I thnk you all for all your input and information. I just got started on here and I believe that reading is powerful and knowledge. You all have great suggestions on LLC for people with poor credit and good credit ac well as website info. So, for someone like me that was not sure where to really start or not knowing the consequences of different steps, all of your info has also motived me jus as much as DG. Some of us need step by step info and it takes patient people to provide that so thank you all and good luck in all you do!

In regards to your question of looking for more specific information on bird dogging - the answer is YES! There is endless information and many threads concering this. Go to the forums section, and either type bird dogging in the search bar, or scroll thru the headings. I'm not sure if there is one specifically for bird dogging - but you can look thru them. Once you learn how to navigate the forums it will be much easier for you to find what you are looking for quickly. But with so many avenues of investing available to us I promise you there are answers to them all here! All the best to you!

It is amazing the disparity between states with regard to forming an LLC. In several states in the west one is able to form a basic LLC in one to two days online. Colorado and Utah being in this category, and the costs are very low. Yearly renewal in Utah is $15 and set up is $52. My point is that you can establish an out of state LLC and then file a DBA (Doing Business As) in your own state with a little work on your side. Check with your Department of Corporations for more information. If you are new to these types of legal documents, consult a lawyer or CPA for help. However, they are relatively straight forward in most cases.
As I and others have written before, you do not need a LLC to begin your real estate investment career. You can set one up after you have a few deals under your belt.

I have this property that has been,sold because my grandmother,had a reverse mortgage on it and the sale has been confirmed;but my wife and I would like to
purchase the property,the realtor is given us bad advice,please help us tell
me what forms to submit.

A year ago my wife and i set up an LLC witha lawyer and split it 50/50..we bought and rehabed and rented a foreclosure, put the deed in the LLC name and last sept. some great tennants moved in..then tax time came and our cpa said we should have put the LLC in just 1 of our names for tax purposes, so we had that changed for $100..now we are looking to do a cash out refi and the mortgage broker said the deed needs to be in my personal name not the LLC. but that i could change it back after the mortgage is signed...so i go to the registry of deeds and the lady says that the charge to swap names around will be a percentage of the value of the LLC...and that`s $2100...twice...so i said i`d have to think about that and i left discouraged..when i got home my wife suggested i call the local community bank for the helluvit..and lo and behold, they said `not a problem`...i can keep the deed in the LLC name, no seasoning,
just a higher interest rate than the mortgage broker...
they support the community and make their own decisions and keep everything in house....we constantly learning new things through trial and error...that was almost a costly lesson..
you can learn a lot of things by reading the DG books and working the DG website, but you really need to get out there and make some mistakes too..

what i did i enrolled in personal coaching with the success team i had my company 10 years ago but i was't registered with the state nor did i have an ein number just some minor paperwork and a 125.00 fee i was able to have every thing right even though when my credit was pulled i was asked about my business i hadn't done anything i was ill so when i did fine about this llc and ein number the coaching team gave me some pointers i'm still trying to purchase first investment property hopefully my credit will improve my company is registerd with dunn and brad and i have my business plan together i've met with a few banks with my plan they were very impressed just taking time i did coaching and enrolled in inner circle still trying to understand it all but i'm determine good luck

You are a god send. I ama os gratefut you posted this information. With out this information I believe I would have make a grae mistake. I could not decide one way or another about starting a LLC or an S-Corp or C-Corp. Your explination was extremely helpful. Burwell & Serene Investments.

HAPPY 4 DAYS AFTER EASTER, 2011: I know these postings can get old and not updated so I'm going to premise what I say with that, because if you read what I'm saying the info will be good for years! WAY BACK IN THE DAY, the LLC was developed for use in R/E, designed to give all parties at least SOME protection and assurance. THATS ALL! I'm sorry all you 100,000 plus people using them, but most all of you would definitely benefit by either a Regular Corporation, either Subchapter "S" for the first 5 years OR just a regular "C" corporation if you're REALLY, SERIOUSLY KNOW HOW OR INTEND ON building a major R/E Company behind all your investments. I AM NOT AN ATTORNEY, THERE IS NO BENEFIT TO ME in what you do. I have a massive back ground in areas of business development, which is way to wordy for this blog, so I'll just give you a couple of the many reasons why. ALSO, LET ME SAY HERE start with a Subchapter "S" Corp. You will also need to set up a separate Sole Proprietorship. A GOOD CPA OR TAX ATTORNEY WHO REALLY HAS YOUR BACK will explain why: WORTH IN SPADES EVERY EXTRA DOLLAR YOU MIGHT PAY, YOU WILL PAY FAR LESS, even at the end of your first year of operation. OK, here we go:

ONE:: It is EASY to establish Corporate Credit in the first year if you have bad credit, and then a regular Corp like this can purchase the property/investment and qualify for the loan "in first position." When you establish the corporate credit, you let it buy EVERYTHING!

TWO: The Cash-In to your company initially is paid to the Corporation. It gets expensed in normal fashions, and then the PROFITS FLOW THROUGH to the Sole Proprietorship. YOU DO NOT PAY YOURSELF from the corporation. You own the cash flow anyway. You pay yourself from the Sole Proprietorship. This way your own income taxes, etc are only paid once. You have thus avoided double taxation on yourself AND the company. But this goes with that: YOU FIRST GET TO EXPENSE OUT THE PROFITS from the Corporation, and then EXPENSE THEM OUT A SECOND TIME, AFTER THOSE PROFITS FLOW THROUGH/ARE TRANSFERRED FROM THE CORP TO THE SOLE PROPRIETORSHIP. YES, YES, YES! THIS IS LEAGLE AND INTENDED TO BE THIS WAY BY THE FEDS; DOUBLE EXPENSING of the CASH FLOW!

NOW WHY IS THIS ALLOWED? Simple: The "S" corporation was created by the Fed's so you would do two things. The first is be an above board company and grow, rather then operate in the then, larger then life underground that was forming in the advent of the Information society. And that is how we referred to what we have become today, back in the 80's. income that businessmen were making from running their new businesses out of the homes. Now it pays to be above board and not cheat! You can "brand" your company operations through your LOGO, etc., and build a company/business that you can Sell when you want or are ready to retire, with far more value then just the positive cash flow.

The second reason is that the "S" corporation HELPS YOU AND YOUR BUSINESS GROW! You DO pay far less taxes per dollar earned this way. What you pay more for is your Accounting at the end of the Year when you have your Taxes done! You have your Corporate Taxes done and submitted separately, and then your Sole Proprietorship is part of your "Schedule C" of your personal income taxes, and they get done separately. The first time I actually had my own corporation for my own purposes, rather then consulting others, I gave myself an immediate $17,300 dollar per year raise.

AND DON'T FORGET TO MAKE REAL SOCIAL SECURITY BENEFIT CONTRIBUTIONS FOR YOURSELF AS OWNER. ALSO, do you contributions to the State for Unemployment Benefits. E-mail me for the reasons why!

So in retrospect, after a year (earlier if your cash flow is good) you built up Corporated Credit that Banks and Lenders Regcognize, you set yourself up for a good Tax Strategy that the Fed's keep supporting and improving upon, because they receive revenues they otherwise would not and you pay less then you otherwise would> Now THAT IS A WIN-WIN!

AND THE THIRD: With a Subchapter "S" or regular Corp, you can raise money for a Fund for your purchases up to a certain amount, WITHOUT having a designated project or property in hand! YOU MUCH CHECK THE STATE OR FEDERAL REQUIREMENT ON THE AMOUNT YOU CAN RAISE: In California (I'm a Arizona Resident now) you can raise up to $750,000 without a stated project in hand: Basically against an Idea. And investors who park money into that fund are protected! They will NEVER invest in an LLC.

An LLC should be a one year, in & out deal only. When it first came out R/E Agents found all types of uses for it. It's BS. After I got into Deans books and started looking even deeper inth R/E Investing, I was flabbergasted as to how everybody has taken the LLC Approach. It's probably the Account/CPA's fault. They will tell you anything to convince you that you will pay too much in taxesin the first year with a regular corp, and then each year thereafter they talk you out of it. Hey, Until you are grossing 3-5 Million a year, DON'T WORRY ABOUT PAYING TOO MUCH IN TAX> THAT IS JUST A CONVENIENT POLITICAL RAP perpetrated by a particular political party thinking that the majority of independent business Owners/Entrepreneurs do NOT have a college degree and they will count on that number to get your vote and screw you into believing you matter. If you don't have a net worth of about $50 million you can't buy a vote in this country from a statesman! So loose the naivety right now. Or at least, that is my suggestion. That's why I love Dean's newer Blogs each week, reminding you and I to TURN OFF THE NEWS FOR A WHILE. THINK FOR YOURSELF. It's not easy for me but I do it.

Concentrate on making your business grow. Every minute you spend on erroneous thoughts about paying too much in taxes is time you wasted in finding new avenues for R/E Investing. With small amounts of money, the codes are all laid out. What you are going to pay is determined. You can make a move here and there but I wouldn't put too much thought into it. Not all Accountants are CPA's and if you become a Corp, chances are you will only use a CPA, and if you currently use a regular Accountant, he or she will loose your business. That is one of the biggest reasons for keeping you an LLC.

So you can take your new Corp, get all those benefits, team up with other Wholesale Investors, raise money or create a pool of money and Put a Buyers Fund together! Oh heck, if you golf and do so with some wealthily men and women, ask present your fund to them on the 12th hole and close them in the club house. I once raised $750,000 from three men, 2 were Mortgage Brokers, and I was the worst Golfer on the planet. Still not very good but lets see what happens over the next two years!

Hope this gets through to somebody out there I actually would hope that Dean would weigh in on what I'm saying. I think this LLC thing has really got to go and now is maybe a better time then not for it to go away. I've started 60+ corporations, many as part of a team effort in the Pacific Northwest. Why is way more then you want to hear about here. I did that between 1976-1979 (26-29 years old). I'm now 61 and I a lot more behind me. I've done Merger & Acquisition in California'a Silicon Valley and yet here I am. Starting over in life and looking for my first deal. It thrills me that I can contribute something to this Blog and to all who would read it. And I welcome a good argument against what I've said. Let's talk turkey!

Cordially,

Joseph Reesha
JCR Real Estate Investments, (Inc.) < setting up now!

Hi all, this forum is awesome! I was talking to a real estate agent today and she was telling me about forming an LLC when doing short sale. If you don't want to put money up front, you can actually sell the LLC before your deal is done and you can still get your fee, which is the difference between short sale deal and how much you're selling that LLC for. She said when the LLC is sold the property goes with it also. I am not familiar with the details as I haven't researched how much an LLC costs to set up in Florida. She told me that someone did that recently and that it was all legal. It sounds like a good plan when you're starting if you don't have a lot of capital to begin with. Even if the cost to set up an LLC is $1000 for example, and you're making 10 to 15,000 dollars on the deal, $1000 doesn't seem that much. I don't know how long it takes to start an LLC and if there is a limitation as to how many you can start. I will try to do some research and get more details. Opinions?

Curtis

I have an LLC, that I started with the help of my accountant. The idea was that I was going to be doing "so much." personal Nursing Care of patients that I could just 1099 myself - Hah!; Just now our area is "underemployed. The Nursing home is closed \, population is down nearly 20%, because of the hurricane scares and real damages from wtorm Wilma ( 2004-05). ( this pretty much destroyed our economy, even before the countrys economy went back But I know ther are deals here in the Florida Keys and on the maniland, where I am from originally. I do hope to be able to use my LLC, though because I think it is a good idea. Things are going to come back but, I know it will take a while. Meanwhile my LLC. is good becasue, the accountant says that I should just pay for anything I do while workiign, like gasoline or even meals. (and then since so far I have little to no income - ther is not any tax.)_ - I am told the day will come whemn the LLC, will become far more usful On his advice I dropped my former corporation. becasue it was from myu former business....
Around town you can see empty stores and offices. And every time I read the local "mullett wrapper," ther are posting of proceedings in court from BAn ks, etc, against property owners, to Forclose. As most know, what I am talking about could be most any town in America, just now. ( The shuttered stores, the abandoned homes, Foreclorsures, even on friends homes. At the moment it is part of the landscape

I read before that One LLC is truly more expensive. Another form of LLC is operating as a SERIES LLC. Each property will be One Series under One LLC. The cost is lesser than one LLC per property. But, only Oklahoma, Delaware, Illinois, Iowa, Nevada, Tenessee, Texas, Utah, and Wisconsin has this form of LLC in their states. Also, you have to be aware that some attorneys might be of the opinion that Series LLCs are not proven at court in their state or counties. You can discuss it with your RE attorney for more information.

Hello Anita,

thanks for your information do you have the website address for Dun& Bradstreet website.please share the address

Ok... I'm just starting out, plan to do assignments and birddogging. It makes sense that I wouldn't need to protect myself under a LLC because the property would never actually be in my name but what WOULD be some good advice for my situation? Is there anything that I need to do to protect myself from being named in a law suit involving a property I only held under contract temporarily or do I not need to worry about it at all?

Hello,

I registered the business as an LLC. I do have an EIN# and Duns #. I want to build business credit and I'm wondering where to start or what companies are good at building business credit as a new company with bad personal credit. I'm working on cleaning up my personal credit also, but I know it is important to have both seperate. I'm in the Central FL area. Any info would be appreciated.

Thank you,

Jenn

"If you don't ask, the answer is always no. If you don't step forward, you're always in the same place."
"If you don't go after what you want, you'll never have it."

I recently asked the Realtor I've been working with if she could view the MLS sold Book, and pull a list of cash purchase's made within the last 90 days.
She told me she would, but because, that was coded information, she by law was not able to supply any of that information to anyone who was not a member of the MLS.
And because I'm not a member, she claims she cannot share this information with me. Am I going about this right ? Or is this a newly passed law that has recently come into effect ?
According to THE Jeff Jenson webinar, this would be one sure fire way to build my buyers list. Then again, might I be dealing with the wrong agent ?

Great explaination.. thank you

Hi ! I'm new at all this. I've heard that using a "trust" with an LLC can be a helpful strategy. Can anyone shed some light ?

We use a series LLC. Not every state has this, ours does and was recommended by our attorney (who is a REI also!). We are buy and hold investors and with many renters, we have many potential "suers" who could slip and break a back or whatever. In Illinois, a series LLC isn't much more $ in the beginning than a regular LLC but will save us $ over the years. We can put a new property in a new series under the same LLC. This keeps tax time easy and still keeps the liability separate.

If you are just getting started and doing flips or wholesaling, check with someone in your state as the laws are not always the same nationwide. But really, your focus needs to be building a network, studying your butt off on all things Real Estate, and start taking action. We didn't form the LLC until after we had our first "hold" property under contract and knew that we were going to buy it. It only took a couple of days start to finish to get it done. Legalzoom is a great resource, we just went to the state and did it ourselves though.

We have a slightly different approach with our investing than most on here but I believe in Dean's strategies. Follow his steps and do it today! If you get a great deal and want to run it by us, that's what the DG family is for! I have seen so many people on day one begging for help on here, and there is nothing wrong with asking for help. But if you haven't read all of Dean's books, then that should be your first step. Then hit the forums on DG.com. Read the Journals from those who have been there, done that.

Remember this Newbies, NETWORK! Find a real buyer and bring him what he wants! There are plenty of tips on this site to help you out with doing this.

We are hoping to share our success story on here soon. Waiting on a couple more things to wrap up before we spill on it all though! Wish everyone well!

Why is all the comments and post are from 2008? Its 2011 is there any updated posts or am I in the wrong page?

Thanks ,
Alicia