Alan,
I agree with Chris - don’t put the cart before the horse. Spend your time on finding a deal first, before you worry about entity creation.
A lot depends on your mentality. There are so many potential facets in real estate and ways to make profit. What are your strengths and what are you passionate about? What do you enjoy doing?
Try to match the type of investing with what you enjoy doing. You will have problems, regardless of how much you think you have it all planned out. There will be deals where you don’t make profit. There will be deals where you lose money. If you enjoy what you do, at least you’re having fun. You can then take that learning experience and build on it.
If you only do it for the money and have to work with your weaknesses, instead of your strengths, you will soon hate real estate.
I got into this because I enjoyed designing. So, rehabbing was something where I was able to use both sides of my brain: the right for the designing, the left to put the deal together. While I wanted to make profit, that was never my first reason for taking on a project. I spent years doing major rehabs of historic homes - deals that most investors passed by, because they were too much work. I loved seeing them change and turn from ‘yuck’ to ‘wow’. I made good profit, but if profit had been my main motivation, I would have never made it past all the unexpected problems that each deal brought. When you do 100 year old houses you simply don’t know exactly what you’re walking into.
Then I got into wholesaling vacant lots. I worked in a neighborhood that was mostly torn down 20 years ago and I really, really enjoyed doing the detective work to hunt down the present owners. When you’re dealing with a 100 y.o. black neighborhood in the South, you often deal with people that didn’t trust business people, like attorneys, who were mostly white. So, when people died they didn’t go through probate - just kept it in the family and children lived in it and then their children, but without tying up legal ends. I had so much fun trying to find clues, going through probate and marriage licenses and…and…and, trying to find the present owners. I then wholesaled it to builders, who had now re-discovered the neighborhood. I made money, yes, but I enjoyed doing it.
I only ever wholesaled 1 house in my life. I got into it because my attorney asked me for help, because his client had a 2nd on it and it was going into foreclosure. I really enjoyed dealing with the seller. I made all kinds of drawings on how I’d renovate it, what walls I’d take down etc. I then had my first auction and sold it to other investors. I made money, but I had a lot of fun and a lot of ‘firsts’.
I made some money in other ways in California and then bought homes sight-unseen in Atlanta, in the neighborhood where I had previously wholesaled the lots. I knew stuff there, that most people didn’t know, and thus had an advantage. I loved finding deals and I believed (and still believe) in the neighborhood. I know it will come back. There are so many changes happening with the Beltline in Atlanta and I can’t wait for it to blossom. In the meantime I have some great tenants, who are very appreciative of me as a landlord, and occasionally some scummy ones that take advantage. Oh, yeah, I am making profit, too.
Just some food for thought…Find your passion and then look what you want to do. Just from my perspective