The 24-Week Challenge: Week 19 - Setting Up Business System Structures
The question the 24-Week Challenge poses is how do real estate investors build real wealth and freedom without access to millions of dollars in capital? Zack Childress is taking us through the steps that will get us to the answer.
This is week 19, so the end of the challenge is near. By studying and following Zack’s tips, you can build your own real estate investing business. This week you’ll be learning about Setting Up Business System Structures.
Business entity structure can protect you from exposure to lawsuits. Entity type has significant tax implications as well. You need to have legal and/or tax advisors help you set up the structure properly.
“Making money is not the hard part. Once you get your mindset changed, you’ll realize there’s plenty of money out there. You just have to redirect it into your pockets.”
Keeping money once you have it is the hard part. Everybody wants it. And the IRS has the right to take it in many ways.
You can incorporate as ‘S’ or ‘C’ corp, use an LLP or an LLC. You may need to establish one entity for one type of deal and another entity for your other deals.
The entity needs to be separate from you so you, personally, cannot be sued. An LLP is a Limited Liability Partnership. Each partner is only liable for what he/she invests in the business.
An LLC is a Limited Liability Corporation. This establishes a wall between you and plaintiffs or the IRS IF operated properly. If it is not operated properly and carefully, that wall will crumble.
“As a real estate investor, it’s not about if you will get sued. It’s about when you will get sued and by whom.”
The person most likely to sue you is a tenant. They think it’s easy money, and so does their low-cost lawyer. If you have the right entities in place, you’re protected.