Will the Anonymity of My Wyoming LLC Make it Harder to Refinance in a Year?

Question

Hi all! I recently got a property in Pennsylvania under contract which is what you might call a “light flip”. I am going to close all cash (about $129,000), spend maybe $10,000 on renovations and then do a cash out refinance. My ability to do a cash out refinance in about 12 months and not have to sell the property is very important to me so the following item troubles me.

Six months ago I created a Wyoming LLC which is –like all Wyoming LLCs- organized anonymously. I am about to create a local Pennsylvania LLC to actually hold the property. I want my Wyoming LLC to own the Pennsylvania LLC but I am flexible about this if it is going to create trouble down the road with lenders.

I have to figure out if loan officers will consider it a problem that my Wyoming LLC is organized anonymously and they therefore cannot verify with the Wyoming Secretary of State what is the name of the organizer, as a lender could with a Pennsylvania LLC by calling the Pennsylvania Secretary of State.

I still have the option to create the LLC using myself as the named organizer rather than my Wyoming LLC, but I would prefer the Wyoming LLC for asset protection and privacy benefits.

Any input or anecdotal advice from you all is appreciated. Do those of you who set up LLCs for real estate acquisition regularly name another company as the organizer? Do those of you who are loan officers need to call the Secretary of State to verify who created an LLC before you lend, or do you accept the documentation within the corporate binder of the LLC as evidence of who currently owns the LLC?

I don't close until July 18 so I do have a week or two here to figure out what I want to do.

Stuart Udis · Answer

My blood is boiling. Who suggested this structure or the need for a Wyoming LLC? How do you expect to obtain title insurance or a loan unless you provide org docs identifying your role in the LLC? As Chris mentioned once your mortgage is recorded anyone can obtain a copy of this recorded document and view your name on the signature line or the mortgage. Hate to say it but you wasted time and money forming this Wyoming LLC. The Wyoming LLC provides no added asset protection to someone purchasing a $100K property in PA. NONE. Choice of law does not apply; venue will most certainly not apply.   Purchase the property in the PA LLC if a LLC is utilized.

Stuart Udis · Answer

@Ethan A. I will begin by reiterating a Wyoming LLC provides absolutely no benefit in your situation. Furthermore, there are certain transaction participants who you must disclose your identity. Namely, your lender and title company. The anonymity (which is a farce to begin with), is not intended for the person you are looking to borrow money from or the company you hope to insure your properties title.

As the owner of a $100K property in PA if there is a conflict or liability event it will relate to a landlord/tenant issue, be a premises liability claim or involve a payment or performance dispute. I challenge you (or anyone on BP) to articulate the scenario where the Wyoming LLC will provide any benefit whatsoever to a $100K property owner in PA.

Most in your shoes wrongly believe the WY LLC allows them to hide in the cloaks of secrecy and in the event something bad were to arise the perceived anonymity will discourage the aggrieved party from pursuing a claim.....tell that to the Plaintiff's attorney who gets a call from a prospective client who busts their ankle on your icy sidewalk, the tenant who is living in conditions that fail to meet the implied warranty of habitability standards, or the contractor you stiff who files a mechanics lien against your property.

Ned Carey · Answer

@Ethan A. Sorry to say I think you were sold a bill of goods with the Wyoming LLC for the reasons stated above. Why do you want anonymity? How far would Apple have gone if nobody ever heard of Steve Jobs?

I love when investors like you want anonymity. I have foreclosed on a lot of properties with the owner never knowing he or she lost it because they wanted to be anonymous.

I don't think the Wyoming LLC will hurt you in any way it just won't help much. It adds cost and complexity, with little to no benefit for most investors.

I don't say this to be harsh towards you but to help others reading along, so that they don't fall prey to lawyers that overcharge for unneeded services. There are lots of GURU lawyers pushing complex structures without helping their clients understand the basics.

Chris Seveney · Answer

This seems like unnecessary complexity and added expense for what you're trying to do.

Even if you structure it with a Wyoming LLC for anonymity, your name will still appear on the recorded mortgage when you refinance, so any hope of true privacy is gone at that point.

Also keep in mind that setting up and maintaining multiple LLCs across states adds cost, tax filings, and administrative overhead. Unless you're planning to scale significantly or have a very specific asset protection strategy, this structure might be more trouble than it’s worth.

Will the Anonymity of My Wyoming LLC Make it Harder to Refinance in a Year?

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