How to 'hide' from your tenants. Need suggestions.

45 Replies

I, like most of owners with more than a handful of leases, tend to put some sort of separation between the tenants and me.  With most properties, this separation, usually via a management company,  is desired to prevent the all hours calls,  the ability to play good-cop, bad-cop, etc.

I currently do the same thing although about 1/2 of my tenants know I am the real owner.   That is all fine with me.

HOWEVER,

I am acquiring a multi-unit property whereby the tenants are pretty much the worst of the worst.  It is a big cash-flow property today but it can be a gold-mine if I can slowly turn the place around to a better cast of characters.  We're talking a 1.1 to 1 Pit-Bull to lease rate, strong evidence of drug dealings, history of scuffles between residents, threats to the managers, the whole thing.  And these people also try to pursue every legal angle they can to keep the ownership tied up.   (yes I have a lot of liability insurance, yes I know the risks, yes, yes.........)

I have a manager(s) and want to be as passive as I can be in the property.  I see my face-to-face role limited to being the 'company man' who works for the bigger company who owns the place.

How can I hide my name and protect me and my family from anything these goofballs might decide to do? I already have the property in its own LLC. I paid for a registered agent so my name is not the contact for the LLC.

My desire is just to make up a name for the property.  Say, 'XYZ Apartments, a Division of ABC Properties of Alaska'.    Can I do that?  Have essentially a fake name on the letterhead and leases?  (of course the local phone number and address would all be correct). 

And as far as my LLC, should I instead register it in another state and make it a foreign LLC in my own state?

Again, I simply want to keep the true ownership of this place hidden from the tenants.  Any ideas?

@Nicolas Franckenfeld That almost sounds like Verde Lanes. Two buildings off Minnesota ave. One of the things I do is have an LLC with a DBA name. Adds that extra layers. Or in your case, have a local Alaskan LLC, owned by your foreign LLC, probably in Nevada or Maryland, with a registered agent.

Bury the property with levels of dba and llc's. As much as you possibly can keep your name of of all documents. If you can, take your name off of the deed and tax records for your primary residence. Keep separate telephone numbers for business and personal calls, ignoring the business line after hours. And be very careful what you have on any social media accounts (Facebook, Twitter, LinkedIn) the will look for you. Set everything to private.

It's something that I'm wanting to understand better as well.  I found podcast #109 to be pretty though provoking.  The attorney featured mentioned that a trust is actually the best form of ownership if one is concerned with keeping info locked down, and the best being a Delaware blind trust.  

The LLC and a separate registered agent is good. As are DBAs for the property management. But these days it's tougher to hide from someone who wants to find you. You're in a more difficult spot than, say a young person or someone from a foreign country just getting started with REI,,,,,because you already have a property ownership and entity internet trail. You can't really take back what's already out there and it's just not that hard to connect the dots. I'm a total amateur and I can find pretty much any property/entity owner. I've even found ownership info for an owner that is a professional internet security expert. They name all the property LLCs by street address, they use out of state registered agents. They have separate entities for PM. But then they'll use a tax mailing address that's easy to track or personally sign a loan doc that gets recorded. That being said, most thugs have limited internet PI skills. :)

LLCs are to protect your assets and to limit liability.  If you are truly concerned about personal safety, I'd really be thinking more about how involved you want to be with the building day to day.  If you are hands-on or on site, it's easy for others figure out (or assume) the ownership, regardless of entity layers.  There are just so many contacts and documents and phone calls when on site that would likely reveal your ownership. 

Originally posted by @Nicolas Franckenfeld :

....  And these people also try to pursue every legal angle they can to keep the ownership tied up.   (yes I have a lot of liability insurance, yes I know the risks, yes, yes.........)

Nicolas:  I missed this on the first read.  What kind of legal angles are you talking about here?  Are the tenants suing for damages from injury on the property?  Are they reporting mgmt to code compliance?  Are they making claims of wrongful eviction?  Or discrimination claims? "Every legal angle" sounds terrible to me because it suggests some savvy self-taught legal eagles. 

There's no local rent control or limits on tenancy termination in the muni where the property is located, correct?

Wyoming and New Mexico have anonymous LLCs. You can have them own the MO LLC which owns the property for added protection.

Originally posted by @Nicolas Franckenfeld :

And as far as my LLC, should I instead register it in another state and make it a foreign LLC in my own state?

Again, I simply want to keep the true ownership of this place hidden from the tenants.  Any ideas?

Sounds like you need some expert counsel on business formation strategies.  If I understand things correctly, any anonymity benefits you receive from filing in another state is usually stripped as soon as you file for foreign corporation status.  Your state is more than likely going to want to know who the management is. With that said, there are millions of legal strategies you can put into place, just depends on how much you are willing to pay to keep your name out of it.  I know that Nevada and Wyoming have strong anonymity laws, the trick is to retain those benefits when you petition to do business in MO.

Here in New Mexico ownership of the llc is completely annomynous. The only public info on the Llc is the registered agent. As long as you have your lawyer or a company act as the registered agent no one would be able to connect you in any way.

Great responses folks. Thanks. A few things: I'm not in Alaska but I'd like to use someplace far away in my DBA just to throw those idiots off. No. I misspoke about them using every legal means. These people have no resources and they are not THAT savvy. Let's just say they like to cause trouble if they feel 'disrespected' , as in they are late on their rent. They'll call the county officials or the DEQ.and lie basically They just want to cause trouble.Of course this is all according to the seller and the managers Yes. I sent an email to my lawyer last week on this topic. I just wanted input from the great BP crowd in the interim. Thanks again
Originally posted by @Leland Titus :

Here in New Mexico ownership of the llc is completely annomynous. The only public info on the Llc is the registered agent. As long as you have your lawyer or a company act as the registered agent no one would be able to connect you in any way.

The LLC name and registered agent are the least of owner privacy concerns on MF property. There are so many other places where ownership gets revealed. Where does the tax bill go? Not usually to the registered agent, but to a business office or PO Box. Sometimes, remarkably, to the owner's private residence or another business or property they own. All that LLC and registered agent set up and and I can back track you as the owner because you live or work or own a business at the tax bill address. Is the mailing address an attorney or accountant's office that I know is handling certain large RE accounts? Has your LLC ever been sued? The lawsuit serves the registered agent but the case file and amended complaint will include the LLC members.

I'm not saying you can't protect your privacy, but an LLC and out of state registered agent is a very thin veil for anyone looking for real privacy.

Originally posted by @David Krulac :

@Nicolas Franckenfeld

If the property and the tenants are trouble, why buy the property?

 

There is a scale for risk and reward.  This property meets my criteria.




 

@Nicolas Franckenfeld based on what you have said, I would be more worried about one of the thugs following you home or to your office and getting your information that way. Personally I have found that folks who use the internet frequently think that everyone understands how to find people. Hiding can be difficult if you have savvy people chasing you down. I would say two layers until they find you would be adequate. Any more than that and you are likely to make a mistake and leave a track somewhere that people can find. 

Medium rre 1to1 small sizeBill S., Reliant Real Estate, Inc. | 720 207‑8190

Nobody who owns pit bulls is very bright.  Dont buy a junk property if you are worried about it.

@Nicolas Franckenfeld

First suggestion, change your profile here to not include your last name.

Secondly don't post on Facebook, Linkedin, Tweeter, or any other on line service.

Thirdly, never own any property in your name, in any entity that has your name in it, or any entity where the state information has your name or anybody else with the same last name. (I've seen where people set up an LLC but the name of the LLC is John Smith LLC, so much for being anonymous!)

Fourth, never get a check in your own name, and never pay a check in your own name, always the entity name. 

Fifth, besides never owning any property in your own name, you should never own any titled personal property in your own name, like a car, truck, boat, airplane, tractor, trailer, or anything else that is registered at the state.  John D. Rockefeller said own nothing control everything.

Sixth, don't tell your tenants your real name, or any part of your real name.  Check with your attorney, but it is legal to use an alias, as long as you are not using it to defraud people.  Think movie stars who use names that are not their own like Cher, Madonna, Fitty Cents, The Rock, Vin Diesel, Wrestling starts , etc.

Seventh, never give anybody your home address, or your home land line phone if you have one, even a fax number at home.  Always use a PO Box or mailing box address for all documents like deeds, mortgages, real estate taxes, utility bills, tenant checks.

Eighth, never accept cash from tenants, only checks, money orders or electronic or direct payments.

Ninth, never tell anybody how many properties that you own; evade the question or give a nebulous answer like a couple, a few, only this one.

Tenth, own every property in a different name, and not a serial name like, Nicolas property # 1, Nicolas property #2, etc that shows the relationship between properties. 

@Nicolas Franckenfeld

Maybe I'm missing something, but why don't you just hire a PM and not be involved with the day to day of the property? "Why do you need to be the company man that works for the bigger company?" Isolate yourself from the tenants completely, not sure why the tenants would have a need to see or interact with you. It sounds like you're more concerned with the personal/ physical risks than legal.

Also, if it's setup in the LLC, the LLC is the "real owner," not you. Ensure your LLC is properly setup and functions as a normal business with minutes, operating agreement, other members (even just 1), etc. This minimizes the likelihood of an attorney piercing the corporate veil. A trust would be a wise move as well, if you're very concerned about your identity, but I would start by ensuring all the LLC info was buttoned up and minimize (eliminate) interaction with the tenants.

Lastly, what's your plan with this building? Are you going to keep the drug dealers and tenants that threatened management? If that's your plan, good luck retaining good management companies. If you have to step in yourself, bad tenants won't care about who owns the building, they'll care about the person in front of them denying them what they want (you said yourself that they threatened the manager, not the owner). If you're repositioning this building, make sure you have a plan and the people with experience doing this type of re-position. Fix the REAL problem and you won't have to worry about people coming after you and your family.  

Medium ccg 4John Casmon, Casmon Capital Group | 937‑361‑8072 | http://casmoncapital.com/podcast

This all seems like a lot of work, a lot of hassle, and a lot of money spent so somebody won't know you are the owner. I'm sorry, I just don't get it. Be the owner. Meet your tenants. Introduce yourself. Give them the phone number of your property manager. They aren't going to care who they call. They aren't going to care who answers the phone as long as somebody fixes their leaking pipe. This is an interesting thread to follow. You people must have very rich accountants and attorneys with all of the money you spend creating entities that hide other entities and the LLCs and the registered agents the Trust doing business as the S-Corp. It's all dizzying...have a good day. Good luck @Nicolas Franckenfeld

@John Casmon   I do have a Manager, but I need to go out there occasionally to check up on the place as we move the property out of this state.  But more to your point, yes, I want the managers to handle 100% of the issues but I know I will likely be physically involved in some things as we improve the place.  The 'company man' is just an off-the-cuff response if they ask...which they will.

And as I mentioned in my OP, yes, I plan on turning over about 50% of the tenants to rid it of the underbelly of society.   Actually, three sets of tenants are supposedly causing 90% of the problems.  Sounds simple but they are all related to each other. 

@David Krulac   Yes, I can tell you read that book "How to Be Invisible" and you made a good summary.  Thanks for the reminder.  I have a friend who reads this forum who follows those things 100%. 

@Tom V.   Yes, I am with you on Pit Bulls, but if I offered you a property that had a 40%+ Cap rate would you buy the property and then deal with the Pit situation?  I would.   'Junk properties' as you call them don't have to remain junk properties and in the interim, getting a big return is not a bad thing IMO.

 

Are all the tenants still locked into their current leases or are they (any of them) month-to-month? Any that are just month-to-month, you can immediately give their notice to vacate once you purchase the place. The rest who are bad will probably give you a reason to evict such as nonpayment of rent.

Just have your gameplan to clean the place up. Do everything legally. No one will "come after you." And really, are these people smart enough or have the money to truly find you? And then what? What exactly are they going to do? Most people are just talk anyway trying to intimidate people with threats of suing or even damaging a place. Sounds like you'll probably have at least some light rehab to do anyway as you gradually clean out the place.

Finally, thank you @Nicolas Franckenfeld and @Tom V. for basically saying that I'm unintelligent. I have a Pit Bull. I find the blanket statements about a dog type ridiculous, and it's getting old quite frankly.

Nicole A., New Page LLC | [email protected] | 305‑537‑6252

@Nicole W.  Sorry about that Nicole.   Obviously that is not true about all Pit owners.  I was just concentrating my particular owners and in haste to respond to Tom made the mistake.   I know many Pits and many Pit owners.  Most are great dogs and most are good or great owners.

I also think Pits are just about the nicest dogs out there although I would never own one, nor do I trust them.   This is one of those topics that get people riled up.  I am basically indifferent for many reasons.

Again, apologies.

No worries. Thank you though. I'm not here to change anyone's mind about the dog because that's just a waste of time. I just don't like when people lump me into terrible groups such as thugs, drug dealers, and well...idiots. lol ;)

Nicole A., New Page LLC | [email protected] | 305‑537‑6252

@Nicolas Franckenfeld

I understand that buying a drug-dealer/pit bull building holds out the promise of great returns.  Personally I would not buy a building like that.   For context, a week after I bought my first investment property in Sacramento, the vice squad showed up and kicked in the door of one of my apartments.   I have been in exactly the same situation as you, thinking about how to maintain some remove from potentially irrational tenants.   After that first experience, I have passed on a number of actual pit bull buildings that looked great on paper.

I try to step back and remind myself what the purpose of an investment is.  Is it just the money?  The money gets you something, but it should be a better, less stressful life.  You are here on an internet message board with people telling you to buy a gun if you want to make XYZ investment.  I've just decided that if I think there is any physical risk to myself or my family or what have you, I'll opt for the lower return.  

I have kids and I don't 'need' to swing for the fences.  If I was 25 again I might have been more willing to take the risk you describe.  But then, I would not have had the capital, maturity, or patience to see it through.  

The open secret about all of these high cap rate, high cash flow properties that people brag about on BiggerPockets is that if you get a rough property, you'll get rough tenants. Period. Whatever town, whatever market, whatever angle you want to play. It's possible to make money doing that. How sure are you that your turnaround play is going to give you a nice place with nice people? If you are 100% sure, go for it, and suck up the risk. But if a really smart, really crazy person wants to find you and follow you home, no out of state LLC is going to hide you.

As a last note, I take a role as you describe - I show up and lead with "the landlord company asked me to do this."  I have $2K truck that looks like a landscape worker hand-me-down, and so even if my tenants figure out who I am, I'm the guy in the truck trying to help them, not the bigwig to hate.  

You are trying to figure out how to get into a business where you are afraid of your current customers and want to hide from them.   Make sure that is the business you want to be in.  

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