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This seems to be a common practice. My parents live in a highrise that has construction defects and it took years to extract money to repair the building becaus

This seems to be a common practice. My parents live in a highrise that has construction defects and it took years to extract money to repair the building because the LLC that sold the building to the condo association had no cash or assets anymore.

deleted 7y ago
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markstos 7y ago
My accountant advised our business to setup a separate business to own the building we wanted to buy. It silos the liabilities of each. Also, you have some flexibility in how much you charge yourself for rent. Depending on which company might owe more taxes, you may want to adjust that rate up and down. In our case, the property business outlived the primary business turned out to be another benefit of decoupling them.
- Cd00d 7y ago
  Liabilities makes sense. I used to be at a remote sensing company that was leasing a plane and when we were close to buying instead the CFO said, we need to start a new company for the liabilities.
  - heavenlyblue 7y ago
    To be fair (not blaming you here), but this seems incredibly dodgy. This is essentially the monopolisation of the market on multiple fronts without any of the consequences to you as a business. For example, you are taking away business from renters who could be making money on rent but also spending that money keeping the buildings safe. Not as sure this should be legal, let’s say.
- fennecfoxen 7y ago
  It also means that if you have a building, and you put a sofa in the lobby, and carpets, and energy efficient light bulbs, and a pressure washer in the utility closet, and you hire someone to do security and maintenance (or contract it out to a third party service), and you set up some deal with Amazon to put lockers in the lobby — then you can sell all that stuff just by selling the LLC, and maintain all the contracts as you wish. Or, you can sell 10% stakes in the LLC to 8 different investors (keeping 20% for yourself), and not worry about eight 10% stakes in the building's pressure-washer. Corporations are basically containerization technology for ownership, and "a building" is a decent place to set a container boundary.

deleted 7y ago

[deleted]

markstos 7y ago

My accountant advised our business to setup a separate business to own the building we wanted to buy. It silos the liabilities of each. Also, you have some flexibility in how much you charge yourself for rent. Depending on which company might owe more taxes, you may want to adjust that rate up and down. In our case, the property business outlived the primary business turned out to be another benefit of decoupling them.

Cd00d 7y ago
Liabilities makes sense. I used to be at a remote sensing company that was leasing a plane and when we were close to buying instead the CFO said, we need to start a new company for the liabilities.
- heavenlyblue 7y ago
  To be fair (not blaming you here), but this seems incredibly dodgy. This is essentially the monopolisation of the market on multiple fronts without any of the consequences to you as a business. For example, you are taking away business from renters who could be making money on rent but also spending that money keeping the buildings safe. Not as sure this should be legal, let’s say.
fennecfoxen 7y ago
It also means that if you have a building, and you put a sofa in the lobby, and carpets, and energy efficient light bulbs, and a pressure washer in the utility closet, and you hire someone to do security and maintenance (or contract it out to a third party service), and you set up some deal with Amazon to put lockers in the lobby — then you can sell all that stuff just by selling the LLC, and maintain all the contracts as you wish. Or, you can sell 10% stakes in the LLC to 8 different investors (keeping 20% for yourself), and not worry about eight 10% stakes in the building's pressure-washer. Corporations are basically containerization technology for ownership, and "a building" is a decent place to set a container boundary.