How can I separate myself from LLC yet still purchase w my money?

Question

Newbie question. Forgive me if already posted.

I'm looking to start investing but am a bit confused about asset protection via LLC yet using my own funds and credit to purchase a property.

My plan is to follow the BRRR method

-purchase for cash

-renovate

-rent

-refinance

However, I want my LLC to own the property, not me the person.

Do I lend my LLC money? Again sorry for sounding so ignorant but I don't know where to look for this type of information

Don Konipol · Answer

@Amaya T. If your LLC is a single member (owner) LLC, it is disregarded for tax purposes, but regarded as a separate entity for legal (asset protection) purposes. So your choices are to (1) lend money to your LLC, (2) invest capital into your LLC, or (3) use your own funds as funds of the LLC and the LLC funds as your own, as in a sole proprietorship.

If you have two or more members, you have to act as either a partnership or a corporation, in which case you could not co mingle funds and would have to maintain separate accounting.

Or, just hire a CPA

If you have two or more members, you have to act as either a partnership or a corporation, in which case you could not co mingle funds and would have to maintain separate accounting.

Or, just hire a CPA

Brian Zabowski · Answer

AFAIK you can change the title to the LLC but may trigger the Due on Sale clause of your contract which have the bank possibly come a knocking. If you do a little hand-holding with the banks and explain this is for asset protection they will usually not enforce it. From what I gather though this is one of those things where asking for forgiveness is better than permission.

Jeff Robert · Answer

Hey @Amaya T.. an LLC is a pass-through entity, so you dont really need to lend it money. As money flows in or out of the LLC from its members, its simply noted as a LLC Contribution or Distribution, it has no real affect on taxation unless partners are involved or income exceeds 250K. Be sure to setup a separate bank account for your LLC, it helps prove to the IRS (if they ever take notice), that your business is legitimate and distinct from personal finance activity.

Scott Smith · Answer

@Amaya T.

I address this issue in podcast #109.

You want an LLC to hold the assets separate from yourself or the operations of the company. The best structure is a Series LLC with anonymity trusts so that you compartmentalize the assets if there is a litigation while hiding your ownership and the company ownership of the underlying asset. People don't sue you if they don't think you have anything worth taking, and if they do anyway then the Series limits their liability to a much smaller amount.

The Series structure I put in place is very simple for taxation purposes for your real estate, and otherwise as a shelter for non-performing assets (like your car). I have worked with Amanda Han (also a BP podcast contributor) to ensure the best and simplest tax structures.

Amaya T. · Answer

thank you for the information. I should clarify

1- LLC will be a partnership of 2 unrelated people

2- we don't want our names 'known' for maximum protection.

3- we each have non real estate wealth to protect

I wonder how this changes the approach

How can I separate myself from LLC yet still purchase w my money?

How can I separate myself from LLC yet still purchase w my money?

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