real estate investment
 

I was reading this months issue of Money magazine and they showed an example of a couple who needed to combine their investing strategies. The male had a lot of money invested in a real estate venture. The magazine recomended incorporating to shield himself from liability. This sounds like a something I am interested. Does anyone know of any good books on starting this sort of a corporation for yourself?

Always a good place to start:

http://www.nolo.com/

Nolo Press is the king of do-it-yourself law books and software, and they have a good rep. Their books are written in plain English. There's a lot of free info on the site, too, under "Law Centers."

There are several advantages to incorporating but LLCs
can also offer tax benefits depending on how the property is to be handled.

There are tons of interesting books and articles out there about this type of asset protection www.creonline.com comes to mind but there are many others.

The nolo press is always a good source of legal information. Good call Rodney

There are many books about Asset Protection and Incorporating. I suggest you talk with an attorney and a lawyer who is knowledgable in corporate entities. They can analyze your situation and give you the proper guidance - books are great references but I wouldn't use them in lieu of a professional.

Keep in mind that a corporation operates as a business and needs to show profits (at some point). Unless I'm wrong here, you can't just incorporate yourself and have lots of expenses without income and ultimately profits. If you're currently on someone's payroll they may not be able (or interested) in paying you as a corporation. You'll need to handle paying your taxes, your payroll, your health benefits, and all the other junk that goes into it. I love working for myself (my business is an S-Corp) but there's more to it than it first seems. You can pay your CPA to do everything but it'll get expensive after awhile. I rely on mine for Fed/State/Local taxes, Payroll, general advice, and tax return preparaion. I do my own bookkeeping.

Lastly, you need to have assets to protect based on your personal exposure. Someone can still sue your business and potentially take its assets so you need to structure things properly.

DISCLAIMER: I'm not a CPA or attorney and this information may not be correct. If I have mentioned something in error, please point it out.

Has anyone here heard of Russ Whitney?
I'm thinking about his course in real estate.

heres another great article about real estate investments
http://foreclosure1.blogspot.com

Thats not really an article :(

Anyone try out that foreclosure formula?

95% of the time you want to form a LLC to hold real estate due to tax purposes.

Whats a LLC?

An LLC is a Limited Liability Company.

http://www.legalzoom.com/law_library...roduction.html

Here's a pretty good resource on what the basics of them are. Basically you're not liable for the company. Basically, no matter what you don't want the properties to be in your name, then you are personally liable for them. However if they are in the name of a company then you are off the hook depending on if there bad economic times.

Or you could just invest in REITs and sit on high dividend yields and price appreciation. It's a more diversified way of investing in real estate. Either way, you should probably consult a money manager or some qualified financial advisor.

Incorporating as a shield from liability may not be a clear cut a shield as some believe. It is extremely important to operate in all respects as a corporation or the corporate shield can be lost. Also, if the goal is to avoid liability in connection with real estate-related issues such as tenant injuries note that corporate assets may still be liable - if the real estate is owned by the corporation the real estate itself is a corporate asset and any equity in the real estate may very well be reachable by creditors. Get a lawyer. Don't cut corners on this. If it's important enought to you to take the step of incorporating you obviously have something to protect. It makes little sense to treat this as a do it yourself project as the expense of incorporating with professional help is not terribly high. You would also be able to get a better analysis of the difference between the corporation/LLC alternatives and consider what, if any, assets the new entity might actually own. Don't forget the accountant either because you want to be sure your new entity is set up and operates in a way that will be calculated to save tax dollars. Good luck.

real estate investment courses are scams. here is your crash course: buy low sell high and leverage.

It is amazing to me how off topic a thread can get. Nevertheless, there is some really good info in this thread. Thanks for the tips all.

Can someone explain in detail how subject 2/owners financing works?

It is actually really simple to incorporate yourself or form an LLC. It's the same as any other business. Basically, if you have $50,000 you want to invest, you put $50,000 of seed money into the business. Then the company would purchase the property. You have to treat the company and your finances totally separately.

There is a book, called "Inc. Yourself" that I purchased recently that described the process and is pretty good at describing your choices. They claim that if you make more than $30,000 a year it makes sense to incorporate yourself. I don't know if I buy that but I understand where they are coming from.

Take my previous example of a $50,000 investment. If you have 1 owner, you would form a corporation with, for example, 500 shares at $100 a share. This is totally an arbitrary number, you just need to come up with a share dollar amount that equals the amount of the company you want to purchase.

If you have 2 owners, and you each have $25,000 to invest; then you could each purchase 250 shares at $100 a share.

On the subject of the topic, there are many good books out there, I would recommend going to Borders or your local book store and looking at several in the Business section, and find one that you like.