Another good tip is to meet with the tax accountant in (early) October. This way if you do need to spend money they can tell you how to do it and how much. And then you’re not scrambling in January to find a guy that can backdate invoices to December
Thanks so much for this incredibly informative video! It did raise a question though. Did I understand correctly that you should have your personal property that you live in, your car, and your spending money (for holidays, eating out etc) in a separate LLC than the LLC your rental properties are in?
Wondering the same. Sounded like it was all in the LLC. Later, halfway through Eric mentioned that if you’re growing, an S Corporation can be used as an ancillary part of your business. EG, the LLC are your workhorses and the S Corporation can be implemented as the HQs/MGMT arm of your business for fringe benefits and expenses (vehicles, company credit cards, company health plan, etc.).
I couldn’t tell you that but I know one advantage of an llc. If your buying REO (bank owned property) they don’t allow you too re assign the contract. But a trick I learned is if you set up an llc and have your proof of funds, you can contract the Property then when it’s time too close you and your investor already have a deal worked out that he will pay you for the rights too the llc instead of a wholesale feee
@kevin Hanks *When a new LLC is formed a request to the IRS can be made for that new LLC to file as an S-Corp. Thus a person can get the legal protection of an LLC & the tax benefits of an S-Corp.*
Would you suggest having a single LLC to hold 2, 5, 10, 100 properties? Should each specific property be held in an individual entity (to isolate them from each other as well as from myself)? By owning, for instance, my own residence plus let's say 5 rental houses... if a tenant sues me, i can lose all 6, right? If i had a house in my name and all 5 rentals in "MyRentalsLLC", and a tenant sues the LLC, i still risk losing all five, right? Where do you see that balance between "maximum asset protection" and "my accountant just jumped out a seventh-story window"?
I had the same question! You should talk to Attorney Robert Bluhm. I participated in his webinar trough Jason Hartman! I learned a lot and I am more confidence right now!
Hi Ken, I love your videos. They are so informative. I have a question for you. If I have rental property, only one, and I get an LLC, what do I tell the renter when they want to know who is managing the property?What would I say?
i just bought my 1st rental property with an FHA loan so i have to live here for 1 year- when the 1 year is up i plan to rent it out asap- Will i be able to transfer my deed to LLC with fha?
Currently working with Provision tax planners. Getting started buying real estate (multi-family). My wife and I dont meet (and lifestyle keeps us from meeting) the real estate professional status, are there any other options thru incorporation or other means to move from passive to active for real estate?
You can take all the expenses of holding the real estate with the exception of the principle. So: intrest, property tax, property insurance, utilities, maintenance, and depreciation.
Worthless. There is no tax benefit from putting real estate in an LLC or an LP versus holding it personally. It’s purely a legal shell for asset protection purposes (and maybe a little anonymity) and it’s going to cost you in legal and CPA fees every year to properly maintain. In California, that LLC will actually increase your tax liability. Having a dedicated bank account per project will certainly simplify the accounting, but you don’t need to form an entity to get that separate bank account. That said, I think you should have all your property in either an LLC, LP, or even a GP ......just don’t do it for tax benefits.
I have LLC Delaware commercial building 5 tenants that will be paid off next year , I would like to not pay DE 6% income tax . If I lived in FL would that change income state tax as property in De ?
If one cannot put the property in an LLC because of the mortgage and the bank, can one instead set up the LLC as a property management company? And then use the property management LLC to deduct expenses for taxes for maintenance, collecting the rent, etc?
Please tell us how to buy a foreclosure property (House). I need to buy my first home. Is it beneficial to buy a foreclosure home or regular listing homes. Also, how much down payment is good to give in the beginning. Thanks
I am in NH I have 4 family on my name (I do not live there -investment property). Bank will not allow me to switch to LLC. Can u advice if I can set LLC without bank knowledge LLC for just asset protection reason. What will be the best road to take?
Check with a knowledgeable real estate attorney. Ask the attorney to set up a grantor (land) trust with you as the beneficiary for the property. Then you should be able to register an LLC and anonymously transfer title from the trust to the LLC without the bank knowing or enacting the due on sale clause.
So the bank doesn't want give loan to a individual who already has 2 houses? But if you use a LLC to buy a third house, the bank will give you the loan, right?
Tim I don’t think an LLC will affect your loan approval whether it’s your 2nd or 3rd house. Whether or not you can borrow a loan under LLC depends on if that LLC has some history of income flow. Most of us won’t start an LLC it has income flow until we have our rental property, so the best way they mentioned in this video is first borrowing money under your personal name (and the property is also under your name) and after a year or so you can change the name of that property to be under LLC while the loan still under your name. After few years your LLC may have enough history of cash flow that you can buy property next time directly under LLC.
My friend rents his home from a Property Manager, my question is can he use an LLC on his home? Does having this mainly protect against a bankruptcy in that the home cannot be taken away from creditors, and also in case of being sued by renters, the home is not taken away for any reasons?
It doesn't protect the property in the LLC. it protects all your other personal assets from lawsuits associated with the property. It limits your exposure to the asset in the Llc. If you have a vacation rental on the beach and a tenant drowns, they might be able to get the rental property but they cant come after you.
You don’t need an LLC to have a separate bank account of course. What kind of risks does LLC mitigate comparing to owning it directly? The bank default is not a joke if for whatever reason they decide to default you (though agree that usually they won’t). What’s the upside of having an LLC if you the loan is on your name? Would be nice to have real examples of mitigated risks.
Agree. I heard nothing to say there is an advantage of and LLC over keeping properties in my name, as long as I have a good personal liability/umbrella policy.
This topic is perfect. I recently found out that you could purchase through an LLC. My husband and I are both 24, just starting out, should we seek out a reputable tax accountant so early or does that come later when expanding?
Natiera Lickfeldt Congratulations! We are just starting out as well. I use a black owned accounting firm dnp financial I’m based out of philly but I think they work with every state I’m not sure. I think it’s never too early to start asking questions and getting guidance. The woman I work with has been a wealth of information in guiding our next steps and presenting options we didn’t know about or expounding on options we did. Good luck with everything 🤗
What if one is already investing as an LP as an accredited investor in syndications with the goal of being a GP in the future? Should they be doing this now through a holding company so they can write off the travel, training, depreciation etc against the income from the investment ps as an LP?
So you could be a GP, but at first or minimum, you must get a Series 65 license to charge on GP management fee, or even more you could be GP using LLC as your GP entity, so that you could get veil
Hello ken! Wonderful topic.... You talked about an LLC ! As you own those properties under your name in the beginning , do you have to create an LLC of your own afterwards orelse you have to transfer your ownership to an existing LLC in your area ?
Thanks Ken, really appreciate the content here and all your video's. Keep them coming! Would love to see a video if you don't have one already on how to get that first time investment property loan through the LLC. Sounds like most do it personally at first. Thanks again!
Yes, it seemed like that first rental converting your home’s title to an LLC when you have a conventional mortgage is a gamble. How to avoid triggering the pay upon sale clause. Especially now with interest rates rising, banks may be more inclined to call those loans that were originated with lower rates. Would love to hear more on how to do this tactically meanwhile reducing the risk of having the bank call your loan upon transfer to an LLC.
My husband and I live in Bend, Oregon. He’s a GC. I’m a Realtor. We’re starting our portfolio. Do you have a recommendation for an accountant like Erik, in Bend?
thank you for the content. it suits my situation perfectly. i have my current loan in my own name. but in 1 year, if i am going to rent this place out. will take your advice and transfer it to a LLC.
I’m in the same situation in that I would like to rent my current home of 20 yrs. so is the key to QC the deed into an LLC but retain the Motgage in your name to avoid DOS clause? What’s the best method here for asset protection?
i just bought my 1st rental property with an FHA loan so i have to live here for 1 year- when the 1 year is up i plan to rent it out asap- Will i be able to transfer my deed to LLC with fha?
Thank you so much for the great content. I have a question, I don’t have a credit record at all so instead of creating a credit record with my name before I acquire a Real Estate property. Could I open an LLC and then open a bank account with that LLC and create a credit record for that LLC? Would that be possible and/or advisable? So that when I get that real estate property I can get it into the LLC and the loan, too.
Thanks for the great video 👍 one must surely invest in life to make profit. Investing make up the top notch hemisphere of the wealth. That's the more reason one should save and invest to secure profit and ensure success
This video should just be named "The benefits of finding an accountant" because thats all you talked about. You didn't actually go into details about much at all
Another good tip is to meet with the tax accountant in (early) October. This way if you do need to spend money they can tell you how to do it and how much. And then you’re not scrambling in January to find a guy that can backdate invoices to December
Thanks so much for this incredibly informative video! It did raise a question though. Did I understand correctly that you should have your personal property that you live in, your car, and your spending money (for holidays, eating out etc) in a separate LLC than the LLC your rental properties are in?
Wondering the same. Sounded like it was all in the LLC. Later, halfway through Eric mentioned that if you’re growing, an S Corporation can be used as an ancillary part of your business. EG, the LLC are your workhorses and the S Corporation can be implemented as the HQs/MGMT arm of your business for fringe benefits and expenses (vehicles, company credit cards, company health plan, etc.).
What do they mean by asset protection? Putting it under an llc and not your name is asset protection. Please explain
Can you claim back tax on solar panels and batteries for your rentals in the uk thanks
GREAT video! Thank you for breaking it down making it easier to understand. Video’s regarding this topic is helpful!!
What's the best way to do real estate wholesaling. Through LLC or S Corporation
I couldn’t tell you that but I know one advantage of an llc. If your buying REO (bank owned property) they don’t allow you too re assign the contract. But a trick I learned is if you set up an llc and have your proof of funds, you can contract the Property then when it’s time too close you and your investor already have a deal worked out that he will pay you for the rights too the llc instead of a wholesale feee
What about real estate taxes?
What about real estate taxes?
@kevin Hanks *When a new LLC is formed a request to the IRS can be made for that new LLC to file as an S-Corp. Thus a person can get the legal protection of an LLC & the tax benefits of an S-Corp.*
But you didnt list any tax benefits from an LLC
Would you suggest having a single LLC to hold 2, 5, 10, 100 properties?
Should each specific property be held in an individual entity (to isolate them from each other as well as from myself)?
By owning, for instance, my own residence plus let's say 5 rental houses... if a tenant sues me, i can lose all 6, right?
If i had a house in my name and all 5 rentals in "MyRentalsLLC", and a tenant sues the LLC, i still risk losing all five, right?
Where do you see that balance between "maximum asset protection" and "my accountant just jumped out a seventh-story window"?
Very good questions. I would love to know the answers.
I had the same question! You should talk to Attorney Robert Bluhm. I participated in his webinar trough Jason Hartman! I learned a lot and I am more confidence right now!
Ryan den Otter very very good info ty
Ryan den Otter nicely put together very clear thanks
@@ryandenotter9064 Boy, you made that attorney a lot of money!!!
Question: Tax Benefits of using LLC vs Foundation for property investing and estate planning
Always great to have you on my mornings thanks for sharing your knowledge with us!!!!
Hi Ken, I love your videos. They are so informative. I have a question for you. If I have rental property, only one, and I get an LLC, what do I tell the renter when they want to know who is managing the property?What would I say?
So if I only have two or even one rental property, can I start an LLC? Thanks.
You can start an LLC at anytime for whatever reason you want.
i just bought my 1st rental property with an FHA loan so i have to live here for 1 year- when the 1 year is up i plan to rent it out asap- Will i be able to transfer my deed to LLC with fha?
Currently working with Provision tax planners. Getting started buying real estate (multi-family). My wife and I dont meet (and lifestyle keeps us from meeting) the real estate professional status, are there any other options thru incorporation or other means to move from passive to active for real estate?
You can take all the expenses of holding the real estate with the exception of the principle. So: intrest, property tax, property insurance, utilities, maintenance, and depreciation.
Worthless. There is no tax benefit from putting real estate in an LLC or an LP versus holding it personally. It’s purely a legal shell for asset protection purposes (and maybe a little anonymity) and it’s going to cost you in legal and CPA fees every year to properly maintain. In California, that LLC will actually increase your tax liability. Having a dedicated bank account per project will certainly simplify the accounting, but you don’t need to form an entity to get that separate bank account. That said, I think you should have all your property in either an LLC, LP, or even a GP ......just don’t do it for tax benefits.
Great channel. Does he have any recommendations for real estate agents to structure their business to save $ on taxes? Thank you.
I have LLC Delaware commercial building 5 tenants that will be paid off next year ,
I would like to not pay DE 6% income tax . If I lived in FL would that change income state tax as property in De ?
I see you talk about asset protection, which is critical. Please let know the info so we can get started if possible.
What about having a tax-attorney, or are you better off keeping them separate?
I currently have an LLC for my construction business. Can I move my properties under that LLC? Those properties are rentals right now
What would be a good structure for operating short-term rentals without purchasing the properties but rather leasing them from a land lord?
If one cannot put the property in an LLC because of the mortgage and the bank, can one instead set up the LLC as a property management company? And then use the property management LLC to deduct expenses for taxes for maintenance, collecting the rent, etc?
Read my response to John Kot.
Please tell us how to buy a foreclosure property (House). I need to buy my first home. Is it beneficial to buy a foreclosure home or regular listing homes. Also, how much down payment is good to give in the beginning. Thanks
I am in NH I have 4 family on my name (I do not live there -investment property). Bank will not allow me to switch to LLC. Can u advice if I can set LLC without bank knowledge LLC for just asset protection reason. What will be the best road to take?
You probably can form an LLC first and then contributed all your property to the LLC.
Check with a knowledgeable real estate attorney. Ask the attorney to set up a grantor (land) trust with you as the beneficiary for the property. Then you should be able to register an LLC and anonymously transfer title from the trust to the LLC without the bank knowing or enacting the due on sale clause.
This was extremely helpful I'm just starting out with a duplex this particular segment was perfect for me.
So the bank doesn't want give loan to a individual who already has 2 houses? But if you use a LLC to buy a third house, the bank will give you the loan, right?
Tim I don’t think an LLC will affect your loan approval whether it’s your 2nd or 3rd house. Whether or not you can borrow a loan under LLC depends on if that LLC has some history of income flow. Most of us won’t start an LLC it has income flow until we have our rental property, so the best way they mentioned in this video is first borrowing money under your personal name (and the property is also under your name) and after a year or so you can change the name of that property to be under LLC while the loan still under your name. After few years your LLC may have enough history of cash flow that you can buy property next time directly under LLC.
jayben
@@timxu666 aila
My friend rents his home from a Property Manager, my question is can he use an LLC on his home? Does having this mainly protect against a bankruptcy in that the home cannot be taken away from creditors, and also in case of being sued by renters, the home is not taken away for any reasons?
It doesn't protect the property in the LLC. it protects all your other personal assets from lawsuits associated with the property. It limits your exposure to the asset in the Llc. If you have a vacation rental on the beach and a tenant drowns, they might be able to get the rental property but they cant come after you.
You don’t need an LLC to have a separate bank account of course. What kind of risks does LLC mitigate comparing to owning it directly? The bank default is not a joke if for whatever reason they decide to default you (though agree that usually they won’t). What’s the upside of having an LLC if you the loan is on your name? Would be nice to have real examples of mitigated risks.
Agree. I heard nothing to say there is an advantage of and LLC over keeping properties in my name, as long as I have a good personal liability/umbrella policy.
How can i get this Tax accountants contact info?
Ken I understand keeping accounts separate, as small investor , just file LLC in MD $300.00. Is it worth expense?
Advice from both! Yes!
Thank you so much!
Good video on one of the most common questions I hear from new real estate investors. Thanks!
Did you offload your hotel holdings ?
Great video Ken!
LLC OR Incorporation, wats best?
How do I get money out of the llc? The money taken out is taxable income ?
You get a K-1 from the partnership or s corp with the associated tax liability
Can I do this with my personal home?
Great question
This topic is perfect. I recently found out that you could purchase through an LLC. My husband and I are both 24, just starting out, should we seek out a reputable tax accountant so early or does that come later when expanding?
Natiera Lickfeldt Congratulations! We are just starting out as well. I use a black owned accounting firm dnp financial I’m based out of philly but I think they work with every state I’m not sure. I think it’s never too early to start asking questions and getting guidance. The woman I work with has been a wealth of information in guiding our next steps and presenting options we didn’t know about or expounding on options we did. Good luck with everything 🤗
Never too early. You will learn as you grow, which can be invaluable
What if one is already investing as an LP as an accredited investor in syndications with the goal of being a GP in the future? Should they be doing this now through a holding company so they can write off the travel, training, depreciation etc against the income from the investment ps as an LP?
So you could be a GP, but at first or minimum, you must get a Series 65 license to charge on GP management fee, or even more you could be GP using LLC as your GP entity, so that you could get veil
Hello ken! Wonderful topic....
You talked about an LLC ! As you own those properties under your name in the beginning , do you have to create an LLC of your own afterwards orelse you have to transfer your ownership to an existing LLC in your area ?
LLC or incorporation...whats best ?
Thanks Ken, really appreciate the content here and all your video's. Keep them coming! Would love to see a video if you don't have one already on how to get that first time investment property loan through the LLC. Sounds like most do it personally at first.
Thanks again!
Yes, it seemed like that first rental converting your home’s title to an LLC when you have a conventional mortgage is a gamble. How to avoid triggering the pay upon sale clause. Especially now with interest rates rising, banks may be more inclined to call those loans that were originated with lower rates. Would love to hear more on how to do this tactically meanwhile reducing the risk of having the bank call your loan upon transfer to an LLC.
Thank you for all the knowledge shared on here. Learned a ton and hope to one day use the information
LLC on a duplex? I am of the process looking for a duplex.
Love it 😊
My husband and I live in Bend, Oregon. He’s a GC. I’m a Realtor. We’re starting our portfolio. Do you have a recommendation for an accountant like Erik, in Bend?
Gc?
I’m so blessed to have watched this video thank you. 🙏🏼
Thanks for the information!
You guys rock! Great video!
I learned a lot about taxes i tough i new stuff
thank you for the content. it suits my situation perfectly. i have my current loan in my own name. but in 1 year, if i am going to rent this place out. will take your advice and transfer it to a LLC.
I’m in the same situation in that I would like to rent my current home of 20 yrs. so is the key to QC the deed into an LLC but retain the Motgage in your name to avoid DOS clause? What’s the best method here for asset protection?
Great work gents!
Thank you this was very helpful!
add Podcast name into your thumbnails and video title. And guest name. Also, your podcast is available on Google podcasts
Thanks for sharing this!
Thank you for all your great videos! If you are wholesaling and have a LLC, is it smart to put the contract with the seller and buyer in your LLC?
i just bought my 1st rental property with an FHA loan so i have to live here for 1 year- when the 1 year is up i plan to rent it out asap- Will i be able to transfer my deed to LLC with fha?
TQ and very informative. Appreciate.
Thank you so much for the great content. I have a question, I don’t have a credit record at all so instead of creating a credit record with my name before I acquire a Real Estate property. Could I open an LLC and then open a bank account with that LLC and create a credit record for that LLC? Would that be possible and/or advisable? So that when I get that real estate property I can get it into the LLC and the loan, too.
You should do one with garret sutton this guy you had on yo get a better idea of how asset protection come to play with LLC an taxes
Thank you!
Most of us, with one duplex, can’t afford to have an ‘Eric’.
Amazing content!!!
Investing make up the top notch hemisphere of the wealth. That's the more reason one should save and invest to secure profit and ensure success
Reliable and humurous, the kind of resource I'm looking for!
Why pay taxes at all?
He never said what was the best, way to set up for long term rental holdings
They mentioned 0 items that would save money in real estate
Sir what is LLC?
Is this LLC can be started in India?
Thanks for the great video 👍 one must surely invest in life to make profit. Investing make up the top notch hemisphere of the wealth. That's the more reason one should save and invest to secure profit and ensure success
Love your content! Thanks A lot!. Any way you can do one on rent control properties. Much appreciated!
I believe that's the one they was talkin about buy-and-hold. So you use an LLC
The social distancing disclaimer really necessary? 🤦♂️
This is greatly informative
New sub from your interview on Peak Prosperity.
Another Benefit on using a C Corp in Real Estate is you wont get flagged as a Dealership.
This video should just be named "The benefits of finding an accountant" because thats all you talked about. You didn't actually go into details about much at all
This 19 mins wasn’t so loaded with info
Is it worth getting an LLC for just one duplex? I want to do what’s best financially.
I wouldn't. You should talk to your accountant because you generally have to file separate taxes for every LLC you have created.
I would just for the liability aspect protection. Yes you have to file a separate return that compiles with your personal return I have three.
HI I NEED HELP SOMEBODY TALK SPANISH?
The young man did not say anything. I spent my 45 minutes to hear something good. Nothing...
Social distancing???
Always great to have you on my mornings thanks for sharing your knowledge with us!!!!
But you didnt list any tax benefits from an LLC