Keeping Ownership Annoymous in Rental Properties

Houston, Texas
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Keeping Ownership Annoymous in Rental Properties

Mak J.
Member since 2018 · 234 posts · 44 votes

I am from Texas and am having hard time finding the right way to purchase real estate rentals (SFH). I have tried doing TX LLC which is owned by WY LLC. This allows to stay annoymous. The only issue comes is now I have to maintain two LLC structure, their annual fillings etc.

I buy in Cash with no mortgage so I do-not have to worry about banks etc


What are my other options for TEXAS? Anybody having creative ways? How do you structure your purchases?

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Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
4y

Unnecessary. Your insurance will cover you for 99.9% of lawsuits, most of which are disputes over security deposits. I've been watching this issue for over 12 years into the only people that lose their property in a lawsuit are landlords attempting to course sex from tenants, running slums despite years of warnings, and blatantly disobeying the law over and over again. 

if your property is leveraged, you won't have much equity in it for them to come after so creating an LLC and a false lein would be a waste of time and money.

People spend way too much time setting up LLCs and buying extra insurance. The number one way to protect yourself is to know and obey the law. 

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  • Scott E.
    Contractor · Scottsdale, AZ · Member since 2010 · 2k+ posts · 3k+ votes
    4y

    You need to talk to an attorney. But my understanding is that Delaware is the best place to create an anonymous LLC. If you set up the LLC there and you have it registered in somebody else's name, it will be tough to trace back to you (Although with that being said, my attorney has advised that in the event of litigation, even an LLC structured in this way can still be traced back to you. If you ultimately are the human behind the entity, you can be tracked down regardless of how many layers you put in place)

    I've never felt like it's necessary to jump through all of those hoops to try to stay anonymous. No need to be paranoid about your tenants finding out your name. Just my opinion.

    2Reply
  • Mak J.
    OP
    Member since 2018 · 234 posts · 44 votes
    4y

    Does Trust keep ownership anonymous?

    0Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    4y

    You can structure an LLC so that it's anonymous. Mine was created online through a registered agent service. They form the LLC with their name and address, file the documents, issue my Tax ID, and give me everything I need to open bank accounts and start operating. Cost $200.

    Do you know how quickly you could accelerate your growth if you leveraged your money instead of paying cash?

    Buy one house for $100,000 cash and you control $100,000.

    Buy four $100,000 houses with $25,000 down and you control $400,000.

    Buying for cash is easy and "safe" but it's very slow growth, kind of like investing in a mutual fund. You also expose yourself to liability. People sue people that have money. If they see you own three houses with $100,000 in equity, that's a very attractive target. If each house has just $25,000 in equity, it's less of a target.

    The DIY Landlord Book4.7248 Reviews
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    2Reply
  • Mak J.
    OP
    Member since 2018 · 234 posts · 44 votes
    4y

    @Nathan Gesner Thanks. I am also looking into creating a LLC to put a lein on all the properties. I am doing my homework but I heard it prevents fraud as well as lawsuits as the first lein holder gets priority. But again, I want to make sure all those things do not create layers of maintainence and fees in cpa and lawyers

    0Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    4y

    Unnecessary. Your insurance will cover you for 99.9% of lawsuits, most of which are disputes over security deposits. I've been watching this issue for over 12 years into the only people that lose their property in a lawsuit are landlords attempting to course sex from tenants, running slums despite years of warnings, and blatantly disobeying the law over and over again. 

    if your property is leveraged, you won't have much equity in it for them to come after so creating an LLC and a false lein would be a waste of time and money.

    People spend way too much time setting up LLCs and buying extra insurance. The number one way to protect yourself is to know and obey the law. 

    The DIY Landlord Book4.7248 Reviews
    WebsiteView Page
    5Reply
  • Terra Padgett
    Investor · Houston, TX · Member since 2022 · 126 posts · 122 votes
    4y

    One way is to use a Real Estate Privacy Trust (REPT). You deed the property to the REPT which takes it out of your name. The trust will appear on any public record items and not your individual name. You'll have someone (your attorney, a friend, etc) be the Trustee of the REPT. They can't do anything with the property without your say so, thus it doesn't really give them any rights to the property. You'll assign a beneficiary of the trust; which can be your LLC.

    0Reply
  • Mak J.
    OP
    Member since 2018 · 234 posts · 44 votes
    4y
    Quote from @Terra Padgett:

    One way is to use a Real Estate Privacy Trust (REPT). You deed the property to the REPT which takes it out of your name. The trust will appear on any public record items and not your individual name. You'll have someone (your attorney, a friend, etc) be the Trustee of the REPT. They can't do anything with the property without your say so, thus it doesn't really give them any rights to the property. You'll assign a beneficiary of the trust; which can be your LLC.


     Hmm, Never heard of that term. That is new and I will look into this for sure.

    0Reply
  • Marcus Auerbach
    Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
    4y

    @Mak J.I am in the "keep it simple" camp. Here is my personal take, you do you.

    It is very easy to get caught up in asset protection stuff, because it's a fear based sales tactic. You first have to have significant assets, before asset protection becomes even an issue. Significant means at least multiple 7 figures. Be a good property owner, treat your tenants professional - your chances of getting an issue is like getting struck by lightning.

    Here is your defense: 75% leverage, property insurance (includes liability) plus get an umbrella policy that covers everything over 1 mil. If you think that's not enough name a scenario where a tenant can sue you for over $1M - AND win. Whatever the answer is, don't do that.

    I have been a landlord for 15 years, many of my early properties in my personal name, I am also very engaged in the Milwaukee investor community and I have seen and heard a lot of "stuff hitting the fan" stories. Very, very few were even close to catastrophic and none of them could have been avoided by an LLC held by another LLC held in a Wyoming Trust.

    As you grow, lenders will require you to hold properties in LLCs anyway. So you have to do what's right for you.

    But here is what I will tell you, some people are more private and there is nothing wrong with that, if not having anonymity gives you anxiety buying single family home to rent may not be  worth it for you. Maybe you will be more happy to invest passive with a syndicator? 

    2Reply
  • Andrew C.
    Investor · SE Wisconsin · Member since 2019 · 111 posts · 71 votes
    4y
    Quote from @Mak J.:

    I am from Texas and am having hard time finding the right way to purchase real estate rentals (SFH). I have tried doing TX LLC which is owned by WY LLC. This allows to stay annoymous. The only issue comes is now I have to maintain two LLC structure, their annual fillings etc.

    This works. What's the problem here? The annual filing fees for a WY LLC are like 100$, including paying an online registered agent to do it for you. Have an annual meeting with the owners - and expensible dinner. And that's kinda it. If your subsidiary LLC (the TX one) is a single-member LLC with the one member being the WY LLC, then it's a pass-through for tax purposes (IANAL or a CPA), so you don't have to keep multiple books (but do need separate checking accounts, CC, etc) or do separate tax filings. This is pretty simple and does the trick. I can't really see what you'd do that would be easier and cheaper.

    ETA: there's other reasons to want this structure as well. For example, if you have rental properties in multiple states then you probably want a distinct LLC in each, and this way they all feed into the same entity, which makes things easier. Or, if that top-lvl entity is a partnership then it'll file its own taxes and issue you an K1, which reduces your chances of an audit vs having a dozen or two properties listed on your personal taxes. Honestly, it's just not that hard to setup and essentially no work to maintain.

    0Reply
  • Lane Kawaoka
    Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes
    4y

    If you are really worried about this just be a LP in a syndication.

    0Reply
  • William Hochstedler
    Broker · Logan, UT · Member since 2013 · 1k+ posts · 1k+ votes
    4y

    Trusts, such as a land trust, will provide anonymity because the only name on public record is the trustee.

    There are services out there that specialize in this for not a lot of money.

    Make sure you are getting good legal advice before putting a lot of assets into a trust so you understand the various structures and jurisdictions. 

    0Reply
  • Jason Marino
    Attorney · Member since 2022 · 160 posts · 186 votes
    4y

    I agree with the comment above by William. Probably the most simple way of creating anonymity at the record title level is to transfer the property a Land Trust. You need to list the Trustee, so the best practice is to use what is known as a "nominee Trustee" of record. This should generally be an attorney that is hired for the position as it will give you the added benefit of attorney-client privilege if completed in the right way. The nominee Trustee resigns upon recording of the Deed.

    0Reply
  • Dave B.
    Investor · Houston, TX · Member since 2022 · 8 posts · 1 vote
    4y
    Quote from @Mak J.:

    I am from Texas and am having hard time finding the right way to purchase real estate rentals (SFH). I have tried doing TX LLC which is owned by WY LLC. This allows to stay annoymous. The only issue comes is now I have to maintain two LLC structure, their annual fillings etc.

    I buy in Cash with no mortgage so I do-not have to worry about banks etc


    What are my other options for TEXAS? Anybody having creative ways? How do you structure your purchases?

    I set up an anonymous LLC in New Mexico. Texas requires the name of the LLC owner to be public, NM does not. So I made my NM LLC the owner of my TX LLC. Google Anonymous NM LLc and there’s a company that will become apparently dominant, I forgot the name of the company I used to do it all. Just know you’ll have to file franchise taxes in both states. 

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