Quotes from Garrett Sutton

The government grants tax and legal loopholes to real estate investors to encourage them to do a job that the government can't.

In an LLC, the members get the benefits of business debt

Their LLC has good credit and is able to borrow $600,000 without the need for personal guarantees. The loan has the effect of increasing each owner's tax basis by $200,000. Because distributions are taxed only when they exceed an owner's basis, this means that Lisa, Lyn and Lovella can each receive $200,000 in profit distributions tax free from the LLC.

To avoid the double tax of a C corporation, most C corporation owners make sure there are no profits at the end of the year. Instead, they use all the write-offs allowed to reduce their net income.

When holding an asset, as a general rule you will be better protected using an LLC instead of a corporation.

It should be noted that under California, New York and several other states's law Chalmer could force a sale of Teo's fourplex. This is why you want to use Nevada and Wyoming LLCs in certain states with weak asset protection laws.

you may want to have your California entities, for example, owned by Nevada or Wyoming LLCs, which specifically offer protection on single member LLCs.

Whenever possible, use business credit cards or loans rather than personal credit, even if you have to give a personal guarantee.

To obtain such protection it is important to sign any agreement as an officer of the LLC. By signing an agreement "Joe Doe" without adding "Manager, XYZ, LLC" you can become personally liable. The world must be put on notice that you are operating as an independent entity.

you don't want a lot of assets in one LLC (or LP). An LLC that holds ten properties is a much bigger target than ten LLCs each holding one property. In the first case, a fall at one property exposes the other nine properties to attack.

By contrast, in a member-managed LLC, the members are the shareholders, directors, and officers all at once.

you use business credit cards for business debt, in most cases that will not be reported on your personal credit and you will avoid hurting your personal credit.

If you want to be a sophisticated investor, you must train your mind to see what your eyes cannot see.

By using separate LLCs we have the certainty that assets in a remote LLC will not be exposed to claims brought against a target LLC. The series LLC does not offer such certainty.

That argument worked until the state of California decided that each series would be taxed as a separate LLC. So instead of paying just $800 for one series LLC in California you would pay, in our four-asset example, $3,200 for the series—the same as if you'd used four separate LLCs with greater certainty of protection.

The series LLC is supposedly designed so that by setting up (and paying the fees on) one asset-protected LLC you can protect a number of properties in separate series within the one LLC.

By including special language in your LLC's operating agreement you may be able to create a safe harbor to insure that future special allocations will have a substantial economic effect.

When shareholders receive distributions from a corporation the transaction is taxed.

It should be noted that complying with the special allocation rules and qualifying under the safe harbor provisions is a complicated area of the law. Be sure to consult with an advisor who is qualified to assist you in this arena.

one of the most significant benefits of the LLC, and a key reason for its existence, is the fact that the IRS recognizes it as a pass-through tax entity. All of the profits and losses of the business flow through the LLC without tax. They flow through to the business owner's tax return and are dealt with at the individual level.

LLCs are favored for asset-holding entities.

In a C corporation, the profits are taxed at the corporate level and then taxed again when a dividend is paid to the shareholder.

On the other hand, transferring the house out of an LLC is not a taxable event.

LLC profits and losses flow through the entity and may be freely allocated without regard to ownership percentages.