How Fast Can You Set Up An LLC For Wholesaling Properties?
How quickly can real estate investors set up an LLC for wholesaling properties?
Many investors are making the critical mistake of procrastinating on setting up some form of legal entity to buy, hold and flip houses under. This not only kills potential returns, but opens them up to a variety of dangerous threats and increased costs.
There are many essential benefits of setting up a LLC, S-Corp or C corporation for wholesaling properties including:
- Discouraging frivolous and malicious lawsuits
- Selling the entity and any associated properties and contracts
- Liability protection
- Business continuity in the face of personal lawsuits
- Reducing tax liability
- Increasing net profits
Sadly many investors perceive setting up a LLC as being expensive, complicated and time consuming. While it can be, this certainly isn’t the case for most. In fact, most investors can set up an LLC or other legal entity for wholesaling properties in less than 30 minutes online and for less than a couple hundred dollars.
Most states now offer the ability to file articles of incorporation of the equivalent online in a matter of 5 minutes. Following this investors can now also obtain their EIN numbers from the IRS online instantly as well. This provides everything needed to set up a business bank account and begin writing contracts and doing business under the umbrella of a LLC.
For newer investors doing a limited amount of business and doing business alone or with one partner this strategy is often sufficient to get started, and the details can be adjusted later.
Of course the wisest thing to do is probably to hire the best corporate attorney possible, one with real estate experience, and have them organize it. As volume grows, relationships get complicated and your wholesaling business grows in value you will want to do even more to protect what you have. This is what separates the serious players and real estate investment firms that last.
However, one of the most important factors remains getting it done, and doing it early. Too many have put it off, and then realized that they are refused the best benefits, or incur extreme expenses in trying to transfer ownership of properties to their LLC after they have already been acquired, if they are even able to. Recognize that many entities won’t allow title to be transferred without penalty. This can mean loans becoming immediately due in full, outrageous taxes becoming due or contracts and deposits on deals in process lost.
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