How To Set up Your Rental Property Management Entity (LLC vs. Corporation)

[@ClintCoons]

Hey, are you interested in diving deeper into this topic or chatting with an expert? Feel free to schedule a call here: aba.link/5yf

[@trindon9439]

I forward this video to 6 of my close friends. The first and best video I’ve seen with someone breaking it down in detail like this. I am so glad you elaborated on the use of the Ccorp vs the Scorp for this situation.

[@ClintCoons]

Glad it was helpful and thanks for sharing the video

[@10xAds]

I always find your videos very informative .. please keep them coming as you are doing everyone a favour by educating us .. thanks

[@ClintCoons]

Thank you, I will

[@greatescape-jc1]

You're awesome! Thank you for sharing your smarts and expertise, God bless you!

[@ClintCoons]

I appreciate that!

[@Outrageousconduct]

Best video I've ever seen on rental properties protection, outstanding!!!!

[@ClintCoons]

Glad you liked it!

[@thedufloth]

Great video Clint! I have to say, you are the first person I see recommended C-Corp for some PM companies. Thanks for all the information!

[@ClintCoons]

You bet!

[@balkrishnaagrawal1064]

this is the best explanation I have seen for the topic. Excellent!

[@Frankiep72]

Another great video Clint! Can you share a sample agreement between the PM entity and the holding company?

[@victorcamilo7232]

Thanks!

[@ClintCoons]

I appreciate this, but it's not necessary. If you send me your contact information, I would like to send you my latest book, Next-Level Asset Protection for Real Estate Investors. My email is andersonadvisors.com.

[@victorial.4345]

Clint , love your info and videos , i did not see any video about how to fill out the EIN application for the LLC to own real estate . can you do a detail video for that ? looks like the IRS EIN under real estate has updated a lot . thank you

[@jayanddenissejones6648]

Awesome video Clint! Thanks for the info. I have become an Anderson client for all my Estate Planning! You guys are awesome.

[@ClintCoons]

Thank you soo much.

[@liakey29]

You are so extremely help and such a wonderful teacher THAAANK You💛

[@ClintCoons]

You are so welcome!

[@H82Miss]

Thanks Clint, great video and perfect timing. I am in the process of setting up entities for my first property right now and was wondering if I should set up an entity for PM. I'll be contacting Anderson for a strategy session soon.

[@ClintCoons]

Doug where did you catch the king in your photo?

[@willie3458]

@ClintCoons in the beginning of the disregarded entity chapter, you mentioned having the property management entity pay the leftover amount from income to the holding company LLC. However, doesn't that create a paper trail in your property management bank account that links and exposes all of the properties managed under that holding company LLC? Is that something to be concerned about?

[@aurelius7435]

If someone who owns several rental homes wanted to create an entity with which to build business credit that for acquiring and renovating additional properties, what is the best structure in which to do so from a tax and asset protection standpoint?

[@ClintCoons]

Great question, to assist you further, I highly recommend you request a free 45-minute consultation to discuss this with my team so we can provide with you an answer that is unique to your situation. Visit aba.link/5yf

[@hisserver]

Thank you Clint. Please advise how to set up the WY Holding LLC for tax purposes? SM or MM partnership with my wife.

[@ClintCoons]

MM taxed as a partnership is my preference.

[@Cclezzgo]

Do you need any documentation around how you pay your PM LLC? for ex. you mentioned 20%+ 1month for every turn? Or can you just pay that out?

[@ClintCoons]

Yes, you should put together a management agreement between the LLC and the PM entity.

[@aurelius7435]

Great video Clint, thank you Wondering if (in addition to the objectives you discussed in the video) there's a way to use the management company to obtain working capital for renovating properties? Or would doing so conflict with the other goals?

[@ClintCoons]

Not a conflict. Think of it as an advance.

[@rc8850]

Clint love the video. I am a platnium member. You guys are great. Quick quesiton for you - Wouldn't fringe benefits be taxable?

[@ClintCoons]

Yes and no. It depends on the type of benefit. Medical, life, accountable plan etc. are not. Cash bonuses, gifts etc are.

[@kimberlindy]

As a Platinun member are you not able to call and get an answer to this question?

[@rc8850]

@@kimberlindyI am sure I could have, but I was watching this video at midnight!

[@marquisemurphy9647]

Great video, but what if im only setting up a property management entity without owning property? Only management. Wouldn't S - corp make more sense then?

[@ClintCoons]

Depends. I like to look at what you're doing outside of the property management business to determine whether or not you want the income from this entity showing up on your 1040. For example, if you're looking to qualify for loans to buy property, you may not want an S-Corp kicking income down to you because this would be discoverable by an underwriter, and depending on your business activity, it could either hurt or help your ability to qualify for a loan.

[@marquisemurphy9647]

@ClintCoons That makes sense. The perk of S- corp not having corporate taxes of like 21%, i think, on top of income tax, just sounds so beneficial. C- corp has always been a bit of a turn-off to me in that aspect for most cases. But your lessons were enlightening. 👌🏾

[@ClintCoons]

@@marquisemurphy9647 😁

[@tyjameson7404]

Epic video ❤️🙌🏾🙏👊🏽👏🏿thank you

[@Convict2Corporate]

How about a Holding Company solely for owning, within a Trust and a main c corporation underneath the Holding with every other company with 80% ownership underneath as subsidiaries including an LLC for all my IP, and a s series llc for all rental properties? I'm going for the utmost asset protection and to get a valuation.

[@ClintCoons]

If you would like a FREE 30-minute consultation, you can request one here - aba.link/clintss

[@mike2959]

Clint. Great video with all the scenarios. Love that you’re talking more about tax planning. We currently have a separate PM for one reason really. Solo 401K. It’s a beautiful thing.

[@PropertyTotalManagement]

Great comment. Is the solo 401K better done from the SM PM LLC or the MM WY LLC (husband & wife)?

[@BeachBum51050]

Any harm (tax-wise) by having the Blue Box select to be treated as a S Corp. In particular, will I lose out on accelerated or bonus depreciation? The Red Boxes are still plain Jane LLCs.

[@ClintCoons]

Yes. Check out one of my videos: kzbin.info/www/bejne/iJzTopaIqNKnqqM

[@jaychung6293]

For the disregarded management company, could you instead distribute $ out to each property holding LLC's rather than going through the main one? What is the reasoning behind doing it the other way?

[@ClintCoons]

It is a matter of preference

[@davidlee906]

What is maximum % you can pay management company under IRS rules? Every advisors tell different opinion, if I create C Corp Election Management Company for my properties, can I charge 15% C Corp Management to my invested LLC properties when I am collecting $40k per month?

[@ClintCoons]

Absolutely because you are doing far more to manage your real estate than the typical PM.

[@rcruz401]

Will creating losses affect my chances of getting financing for a mortgage or cash out refinance on an existing mortgage with a lot of equity?

[@ClintCoons]

Not typically. RE losses get added back into your income.

[@robertduffy5805]

Can you convert a disregarded PM LLC to a C-Corp PM LLC once it makes sense, or is it better to kill the Disregarded PM LLC and replace it with a C-Corp PM LLC years later?

[@ClintCoons]

Depends. If in the same line of business then just change the tax election.

[@bdmonist]

You mention not to have payments going to holding company. Is it a problem to have the holding company as primary on the bank account with property llcs named on account. Payments go to property llcs but all go to same account to simplify banking? Separate books are kept for accounting purposes.

[@ClintCoons]

That works

[@yosefabramov2305]

I am an electrician, what would be the best way to go? LLC or S corp or C corp??

[@John-bx6if]

C-corp all the way.

[@ClintCoons]

We need to look at your situation and run a comparison. If you would like a FREE 30-minute consultation, you can request one here - aba.link/clintss

[@soullessdevice]

If you are doing more than 200k in revenue per year then go S corp. If less go LLC. That's what I found from my casual youtube research for my electrical business. It's pretty complicated though if you have other sources of income so it's worth a sit down with a professional.

[@danielnolte3579]

What if you are in a lower tax bracket but you make around 47k a year in rental income after expenses? What type of entity should I create to minimize my taxes because my properties generate a lot of income but they are low cost properties so the write offs on them are lower.

[@ClintCoons]

@danielnolte3579 I am teaching an event this Saturday. If you would like to learn more you can register for one of our upcoming Livestream 1-day Tax and Asset Protection Classes for Real Estate Investors. Here is the link: aba.link/KZbinAP.

[@aqueenwhocares2888]

My husband have property in Jamaica and his family is doing a terrible job of managing it we live in the states what should we do??

[@ClintCoons]

Hire a professional manager would my first step.

[@NicholasVaccariello-pr2cg]

Do you keep family and business separate?

[@ClintCoons]

Yes

[@TheWilly0618]

Grate information

[@ClintCoons]

Glad it was helpful

[@ciprodriguez]

New SC law in regards in Wholesaling. Make a video please. I think it's a bad thing. Can't market a home with out being on the title. I see everything becoming just that. I Can't be an affiliate marketer because I don't own it. I can't run ads to a product I don't own in SC unless I have a marketing license. Is that where we are going? Do I need to start a Marketer's Association similar to NAR?

[@Vonnie12]

I’m I correct by saying that the c corp that u set up in this example will be taxed at 20% but it’s still better because if u didn’t set up the c corp it would be taxes at the federal tax rate So that’s why u set up the c corp so u can get a deduction and avoid the federal tax rate which is higher than the c corp rate ? But ofc this is only smart to setup if u have a net gain at the end of your tax year because the goal is to create a loss or 0 gain so u pay no taxes

[@sgtam88]

When the management company c corp transfers $2650 to the holding company, would it subject to income tax on the c corp? Or both the c corp and the holding company?

[@ClintCoons]

The $2,650 does not count as income for the C-Corporation, as it is merely collecting the funds on behalf of the LLC.

[@sgtam88]

@ Thanks Clint! Is it doable to create one management company that collects not only rental income, but also investment income and consulting business income? So it serves as an intermediary for the holding company, charges management fees, and get all tax savings.

[@ClintCoons]

@@sgtam88 I recommend setting up a separate LLC specifically for the property management side, structured as a disregarded entity under your consulting business. By doing this, you create a clear legal and financial distinction between your active consulting business operations and the property management activities. This separation not only helps to streamline accounting and record-keeping but also provides an added layer of protection by isolating any potential liabilities that may arise from managing real estate. It ensures that any risks associated with property management won’t directly impact your primary consulting business, offering peace of mind and better organizational structure.

[@sgtam88]

@@ClintCoons Thanks again, Clint! Your answer helped me understand that grouping similar businesses would give me better protection. Truly appreciate it.

[@DarwinO1919]

Don’t you need to be real estate broker in order to establish property management company?

[@ClintCoons]

Not if you limit the management to your own properties.

[@equal2adimepiece222]

Does the management company LLC go under the holding company? If not, why?

[@ClintCoons]

I prefer to keep it separate so as not to tie the property ownership structure to the management entity.

[@equal2adimepiece222]

Why wouldn’t the PM entity pay the rent (minus 10% management fee) to the LLC that owns the property & that LLC pay its own expenses/taxes and then whatever is left over transfer that amount to the holding?

[@ClintCoons]

You can do that as well.

[@dontae-oi5gw]

How can you remain private when WY LLC are required to file Beneficial Ownership Information?

[@ClintCoons]

The information you file is not available to the public.

[@TheWilly0618]

Amazing

[@NicholasVaccariello-pr2cg]

Think AI can replace tax advisors?

[@ClintCoons]

Not currently.

[@nysteelhorse]

Long way off from that. Too many options and possibilities that come from creativity and interpretation. Really helpful advisors see the nuance of your situation and the intent.

[@kapper7848]

Hi Clint. Is the property mgmt LLC a WY LLC?

[@ajitdivaraniya3666]

Same question I have

[@ClintCoons]

No it would be set up in the state where the property is located.

[@joebessette3383]

If the PM LLC is not owned by the WY. llc than there is no hiding your ownership

[@dab4901]

@@ClintCoons Hey Clint, in your example, if your PM co. LLC - C-Corp is to be set up in the state where the property is located, would you recommend setting the entity up where the member of it is a WY LLC holding co.--different than the WY LLC holding co. that's the member of the real estate LLC's? Or is there no real benefit to having the PM co. LLC being owned by a holding co? Lastly, you keep referring to you being in Washington and the properties and 3rd party PM co. being in Missouri. Would your strategy change if you resided in the same state as your rental properties and 3rd party PM co?

[@tyjameson7404]

This guy is good 👍 🙌🏾❤️🔥🙏sorry Tobi 💔you have serious competition that has showed me two new hacks you never taught me in all your S-corp and C-corp videos 💔😥

[@ClintCoons]

I haven't taught him these strategies yet. He can only handle soo much. 😂😂

[@tyjameson7404]

👍🏼🙌🏾👌😆

[@mackayleebeach]

Does the management entity need to follow state licensing laws?

[@ClintCoons]

If you plan to manage property other than your own

[@kristinawinkle6407]

Can you buy prooery in another state with a Wisconsin LLC

[@ClintCoons]

I recommend registering for a complimentary consultation with my team. We'll tailor our advice to your specific needs. Sign up here: aba.link/5yf

[@gavnonadoroge3092]

can you do a video about pitfalls of setting up entities and then not filing taxes correctly. because your videos make it seem like its a walk in the park, but in reality it can have devastating consequences.

[@ClintCoons]

Noted.

[@d3vi0uz1]

5:56 go ahead and say it. Democrats.

[@duppie75]

Clint, What's the best way to contact you? I've reached out via Linkedin and via email and would just like to know if I'll indeed receive a response? Thanks..

[@ClintCoons]

If you would like a FREE 30-minute consultation, you can request one here - aba.link/clintss