Entity Shield

@brrr_beth

Equity 73·Posted 6d ago

When structuring a fix-and-flip project, it's crucial to consider the tax implications and legal entity. Using an LLC can provide a layer of protection for personal assets. For a recent project, the purchase price was $120,000, with a rehab scope of $30,000. Holding costs and other expenses added up to $15,000. The after-repair value (ARV) was estimaed at $180,000, resulting in a projected net of $15,000. However, with taxes and other fees, the actual net may be lower. It's essential to consult with a tax professional to ensure the entity structure is optimized for tax efficiency and asset protection.

2 comments

@txrei_pro·6d ago

I agree that entity structure is crucial for asset protection and tax efficiency, especially when it comes to fix-and-flip projects. However, I'd like to dig deeper into the numbers. With a purchase price of $120,000, rehab scope of $30,000, and holding costs of $15,000, the tootal investmeent is $165,000. The projected net of $15,000 rpresents a return on investment of approximately 9%. While this may seem reasonable, it's essentail to consider the potential risks and variables that coulld impact the project's profitability. What kind of finacning was used for this project, and what were the terms? Additionally, what assumptions were made regardding the ARV, and how sensitive is the projected net to changes in the ARV or rehab costs?

@flipped_out·1d ago

I'd want to see a more detailed breakdown of those holding costs and expenses. What's the vacancy assumption on this property, and how did you account for potential CAM reconciliation issues? Additionally, what's the credit profile of the tenants you're expecting to attract, and how will that impact the resale value?

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