What is the Best Entity to use when Flipping Houses?

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  • Great article. I am not a CPA or lawyer but we do invest in real estate in the Washington state area. Does the general tradeoff for LLC versus C Corp apply to all states? For example, will lenders in WA State look at it the same way they do in other states?

    • Mark Ferguson says:

      Most lenders will look things the same way in all states.

  • Noam Ofan says:

    Hi, Mark.

    I’m currently buying fixer uppers with the intention of fixing them, placing a tenant and then cash-refi to get my total investment back but then also keep the rental for the long run.
    I do this under a sole proprietor LLC.
    I find that sometimes I’d like to actually flip the property for a nice cashflow income, but the problem I have is that if I already own the rental under my sole proprietor LLC then I’ll be taxed more on my flip profits, whereas if I plan to flip a property before I actually close on it then I can take title using a different LLC with an S-corp election.
    Is there a way around it? Meaning, if I bought the property under the sole-proprietary LLC and later decide to sell it, can I somehow change the LLC into an LLC with a S-Corp election before the end of the year so I can be taxed accordingly?

    Thanks!

    • Mark Ferguson says:

      I would talk to an accountant

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