In these troubled economic times, even a short paralysis may cause a business to collapse. Essentially, there are only two choices for management of an Oregon LLC:
I cringe when I hear the following question from newer investors: See what I did there?
The answer differs from person to person. As a young, first-time investor, I believe that I have an intelligent rationale for investing this way. I hope that as I explain my rationale for investing under my name, other young, first-time investors will benefit from my reasoning and make an intelligent decision for themselves.
At the very least, I hope to be a thoughtful counter to those who dogmatically proclaim that an LLC is a must. Learn how this investor did just that, in this exclusive story featured on BiggerPockets! Click Here For Your Free eBook My Investment To give you a little background, I used virtually the entirety of my savings to purchase and repair my first little duplex back in November of Having put in work to make it livable, I now rent out one unit to some wonderful tenants and live in the other half with a roommate.
I had and continue to benefit from several immense advantages in owning this property under my name. These advantages would have been forfeited should I have moved the property into an LLC or other business entity.
Further, in my case, I believe that the protections of an LLC are minimal, easily lost, and expensive at best for investors in similar situations to my own. This type of loan allows first time home buyers to put down as little as 3.
This type of loan is available to people purchasing primary residences only, not companies. Under their rules, the property that I bought was a exactly that — a primary residence. It just happened to also be a duplex with a very rentable second unit. Try getting that through an LLC.
Furthermore, I pay mortgage insurance on my FHA loan, which is also tax deductible. I might not be able to claim either of these tax breaks on my personal tax return were I to move the property into an LLC.
But because this is my house, at the end of the day, I have the option to cheat when necessary by mixing personal and business assets. I have no corporate veil to defend, and thus have more flexibility in moving assets around, managing tenants, doing work on the property, etc.
Potentially Unlimited Liability Let me start this off by saying that millions of investors, some of whom have high net worth, invest in real estate without using LLCs.
They protect themselves from liability through umbrella insurance policies, which have worked for decades, and that I trust to work for me. That said, there are two reasons why this advantage to the LLC was not something that I felt was of paramount importance to me.
In the event that someone successfully sues me for more than that, then yes, my personal assets are at risk. In that event, I lose everything I own. As a year-old kid, and I have virtually nothing to my name besides a few small retirement accounts relatively hard to lose in a judgementthe property, and some savings I hope to invest in the next property.
Oh, and, by the way, something would have to go very wrong for that to happen. I like to think that I am a respectful and attentive landlord and that I do my best to make sure to respond to any questions or concerns from my tenants. Secondly, LLCs and other businesses only protect their owners from unlimited liabilities if they are run correctly, preventing the opposition from piercing the corporate veil.
I see running my business this professionally as something that would be very difficult to do correctly, given that I live in the property and could be considered a customer.
I believe that I am unlikely never to conduct personal business in the property that I live in in a manner that a savvy lawyer could not use against me. I also believe that I am perhaps not legally savvy enough to be perfect in my accounting for which improvements to the duplex are luxuries for my personal happiness, as opposed to improvements for the business.
That corporate veil might have been as easily swept away as the blinds in my living room. Are they my blinds? I Cannot Remain Anonymous Behind the LLC Many real estate investors prefer to distance themselves from their properties to make it difficult to sue them and to put a barrier between themselves and their tenants.
An LLC can be a great way to do that. In my case, and for many first-time investors who are owner-occupiers or owner-managers, this advantage is likely forfeited from day one.
I live right next door to the tenants.Writing a business plan may seem a daunting task as there are so many moving parts and concepts to address. Take it one step at a time and be sure to schedule regular review (quarterly, semi-annually, or annually) of your plan to be sure you on are track to meet your goals.
The purpose of this business plan is to secure a $50, three-year Bank of America loan to fund the purchase and marketing of a food truck restaurant (Holey Moley LLP) in downtown Washington, D.C. Holey Moley was founded by Pat Jabroni and Mickey Jordan, Mexican food chefs and connoisseurs, in .
Nov 20, · Developing a real estate business plan is critical to forming a healthy and sustainable business, defining and measuring your sales goals, and growing your business holistically and proactively.
This post will show you how to create a great real estate business plan that helps you organize and grow Phone: () It is my understanding that to do business as a real estate agent, I have two options in California which is a Professional S Corporation, or a sole proprietorship.
Founded in , LandCap started as a real estate investment firm focused on distressed land & redevelopment mixed use assets. Since its founding the firm has made 19 acquisitions to date & has successfully exited multiple projects providing significant investor returns through a proactive value-add approach including entitlement, re-entitlement & development.
Real estate business owners share practical tips for starting a company and making it a success. Share. she was brimming with ideas two years ago when she opened her business, Custom Realty Solutions LLC in Indianapolis, which is affiliated with RE/MAX.
Create a business plan .