Buy and Hold - did you form an LLC or DBA?

22 Replies

Hi Everyone - 

I haven't made any deals yet - just information gathering at this point. I would prefer to not use my legal name on deals to protect my family's privacy. In your educated opinion, which is better - LLC or DBA? Neither? I'm leaning towards DBA at the moment. What are the advantages and disadvantages with regards to buy and hold investing?

The time and $ cost for using an LLC is worth it to me to keep my personal name and SSN in fewer places. I'm highly vigilant trying to prevent identity theft, this is one of the spokes in that wheel.

Tyler Mullen, CFE

I would say go ahead and get an LLC set up anyways if you can spring for it. In PA a setup is around $400 with a lawyer, about $200 if you do it yourself.

It's my understanding that only a LLC of the two can protect your personal assets in the wake of a lawsuit or something. Plus with the new tax benefits, the LLC is also a good call.

This way it has time to "season." If you're going to use institutional lending, quite a few banks want to see a history. It helps down the road if your looking for credit and such.

Good Luck, Hope you get you first deal.

-Bishop

The Bishop Real Estate Collective

The advantage of a LLC is that if properly setup will protect your personal assets from a lawsuit and depending on your state can give you complete privacy to you actually owning the LLC.

For me these two things makes it a 100% requirement to only do things inside a LLC.

Originally posted by @Jason D. :

@Meghan Custer neither will likely give you anonymity, because the info is public in most states through the chamber of commerce. An LLC give you asset protection, whereas a DBA does not

Florida if done properly is anonymous or takes a illegal act and the fbi to get involved to remove the layers.   I know NM has completely anonymous ones.  

Originally posted by @Jason D. :

@Eric C. Go to sunbiz.org and you can find all members of an LLC. Not anonymous at all....

Hence why I said if done properly in Florida it can be anonymous.  

You won't find any of my members of my LLC on Sunbiz throw in a few other things and I could of made it even more layered and anonymous but for my needs my works 100% and has nothing pointing to me as the owner.

Yes, I formed an LLC...13 years and 34 units after purchasing my first property.

@Tyler Mullen there is no prevention of theft any more...just prevention of use.  The chance that all of our SSNs are on the black web is well over 50%.

Originally posted by @Jason D. :

@Meghan Custer neither will likely give you anonymity, because the info is public in most states through the chamber of commerce. An LLC give you asset protection, whereas a DBA does not

Jason can you expound on the chamber of commerce comment I have never heard of that.. title companies check with the secretary of state for LLC registration.. and in our state Oregon u must name the managing member and you must use a physical address not a PO box. has to do with Service.. IE serving U with litigation.. I have never heard of anyone taping into a chamber of commerce for this stuff but certainly willing to learn something new this morning :)

@Jay Hinrichs in Florida, you can get the member names and address from sunbiz. If the member names are not accessible through that, you can then search the local chamber of commerce business directory, where 9 times out of 10, the owner of the business is there.

There are sometime a few layers of LLCs and DBAs to go through, but it's all accessible to the public

Originally posted by @Jason D. :

@Jay Hinrichs in Florida, you can get the member names and address from sunbiz. If the member names are not accessible through that, you can then search the local chamber of commerce business directory, where 9 times out of 10, the owner of the business is there.

There are sometime a few layers of LLCs and DBAs to go through, but it's all accessible to the public

gothca have to put that one in my quiver not that we chase down ownership very often we just call our customer service department at our title company and they do the work for us.. :) 

Florida LLC members are public records.

There are two ways I know of to keep privacy in Florida.

The first one, and probably the best for asset protection in case of single member LLC since FTC vs Olmstead is to have this LLC owned by a WY LLC. The WY LLC being anonymous, the FL LLC records will point to it stopping the trail there.

The second option is to have the member as a trust. The trust being not recorded, you won’t find the beneficiary.

Last, for titling a property in FL don’t forget the land trust option. FL is the only state where land trust statutes offers also some level of additional liability protection and also gives great anonymity.

Originally posted by @Jason D. :

@Eric C. What's your LLC?

Then that would defeat the purpose.  But I can guarantee you my name isn’t on Sunbiz. 

@Matt Nusbaum

Can you use Wyoming LLC and do business in another state? In California, there is an annual cost to maintain an LLC.

are you asking if you should use the name of your LLC or use a DBA name still with the LLC? Or are you asking if you should create an LLC vs just operating as a sole proprietor using a DBA?

@Joshua Wynn

Create an LLC or operate as a sole proprietor using a DBA.

DBA is the cheaper option and I've heard that an LLC can be "pierced" if you use your own money for business use.. Just not sure if DBA offers enough protection - I'm leaning towards DBA for the first deal and then worry about creating the LLC once I expand to second, third... deals

Originally posted by @Meghan Custer :

are you asking if you should use the name of your LLC or use a DBA name still with the LLC? Or are you asking if you should create an LLC vs just operating as a sole proprietor using a DBA?

@Joshua Wynn

Create an LLC or operate as a sole proprietor using a DBA.

DBA is the cheaper option and I've heard that an LLC can be "pierced" if you use your own money for business use.. Just not sure if DBA offers enough protection - I'm leaning towards DBA for the first deal and then worry about creating the LLC once I expand to second, third... deals

DBA does not offer ANY protection. If you have no assets, then you have nothing to lose. However, if you have some, not getting them insulated from each other is dangerous as you can loose all of them at once.

Yes LLC veil can be pierced if you are not using it properly. The same can be said about insurance, if you start a fire on purpose in your house, your fire insurance won't cover you. But if you are cautious and respect their mode of operation, LLC offer very strong protection from either inside liability (all states are almost the same) and from outside liability (each state is different and there is also differences between single and multi members LLC. Some states have weak protection while others are very strong).

LLC all day! DBAs don't do anything to protect you whatsoever. I also disagree with the statement that says "if you have no assets then you have nothing to lose". You have everything to lose when you're not in an LLC. Even if you have no assets, anyone can sue you personally and garnish your future wages even if you have no assets currently. You have a paycheck and a lawyer can garnish those wages for a very long time. You will be basically living a life to work to pay off this lawsuit. HIGHLY recommend getting an LLC., buy general liability insurance and get insurance on all of your properties.