Ask Me Anything! Free legal advice

Tax, SDIRAs & Cost Segregation
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Ask Me Anything! Free legal advice

Scott SmithPro Member
Attorney · Austin, TX · Member since 2014 · 1k+ posts · 932 votes

I'm the asset protection attorney out of Austin, Texas that protects real estate investors from lawsuits. What I want to know is the question you have about lawsuit protection, taxes, insurance, financing, etc. as it relates to owning property in a company. 

If you ask, I'll answer.

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Steve Vaughan
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
10y

Bueller?  

Bueller?   

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  • Jon S.Pro Member
    Investor · Tampa, FL · Member since 2015 · 530 posts · 92 votes
    10y

    What mileage is deductible for a real estate investor who practices the BRRRR strategy, works from home, and travels back and forth to the properties. During the renovation stage, I drive back and forth between home and property a few times a day; are those miles deductible?

    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @?steve Vaughan  

    yes lots of questions and no answers.. probably swamped with off line PM questions and answers

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    3Reply
  • Andrey Y.
    Specialist · Honolulu, HI · Member since 2014 · 1k+ posts · 1k+ votes
    10y
    Originally posted by @Jay Hinrichs:

    @?steve Vaughan  

    yes lots of questions and no answers.. probably swamped with off line PM questions and answers

     Probably decided to do a good deed, then realized he bit off more than he could chew..

    2Reply
  • David Zheng
    Investor · Saint Louis, MO · Member since 2016 · 970 posts · 1k+ votes
    10y

    Hi Scott,

    So basically theres a condo in to a very good complex that I want to buy and rent out. however the HOA only allows 12/60 units to be rented. its extremely rare for a unit to become available to rent and when it does, every unit gets entered into a raffle to see who gets the rental status.

    this unit I'm buying is being sold by the original builder of the complex and so has an LLC that allows it to be the SOLE exception to the 12/60 rule and therefore is the 13th rental allowed. now this unit is the only one left under the LLC and so the owner is willing to "sell" me the LLC in order to keep rental status.

    Is this allowed or will it break any laws I'm not aware of?

    0Reply
  • Brian C.
    Investor · Aptos, CA · Member since 2015 · 87 posts · 38 votes
    10y

    @Riq H. I wouldnt worry about trying to keep that deposit..even though you might be entitled to it. Cancellation of your current escrow will require signed cancellation instructions from both buyer and seller or that deposit will just sit there in an open escrow for years potentially while the parties fight it out and neither party will have use of it. Life is too short..cancel escrow, give them the deposit back, get that property back on the market I'd say.

    0Reply
  • Kimberly H.
    Residential Real Estate Broker · Chicago Suburbs, IL · Member since 2013 · 1k+ posts · 594 votes
    10y

    Ok, the whole piercing the corporate veil issue...does any lawyer really know for sure how that can happen? Every attorney I talk to has a different take on what you can and cannot do, they only thing they all agree on don't use LLC funds to pay for personal stuff. So I am guessing there isn't case law that discusses anything other than that. Besides that, is everything else they say that will pierce the corporate veil really just all opinion? Is there a way for a layperson to research the case law on this subject themselves? Does one need to find a lawyer who ONLY does LLCs in their state and NOTHING else to find someone who really knows?

    2Reply
  • David Lowe
    Realtor · Denver, CO · Member since 2016 · 162 posts · 37 votes
    10y

    Like you, I currently live in Austin, TX. However, I am moving to San Diego, CA soon. If I incorporate my real estate company in Texas and,  
    1). Continue to invest in California and there are any lawsuits, how would it work if the company was out of state?
    2). What structure would you recommend (LLC, etc)?

    1Reply
  • David Faulkner
    Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes
    10y
    Originally posted by @Jay Hinrichs:

    @?steve Vaughan  

    yes lots of questions and no answers.. probably swamped with off line PM questions and answers

    The OP said to ask him anything, but never explicitly said that HE would be the one providing the free legal advice ... LOL. Or maybe that other attorney scared him off when he pulled the "lawyer police" bit ... :)

    1Reply
  • David Faulkner
    Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes
    10y

    Please explain the pros, cons, and methods of acquiring, financing, holding, and selling title to RE in a trust, either vs using a LLC or in conjunction with using a LLC.

    1Reply
  • Lee Zap Martin
    Investor · Las Vegas, NV · Member since 2014 · 19 posts · 12 votes
    10y

    Hey @Kimberly H.

    Regarding your corporate veil question....I am not an attorney, therefore I cannot give you legal or tax advice. I am a business owner, and my business is Real Estate - so I will share with you what I know and what I do... 

    The most common ways to pierce the corporate veil are (1) being under capitalized and under insured; and (2) law of form and substance (file minutes, hold board meetings, etc.). 

    Remember that the law is "words"... and how you word things can be a sign of a weak corporate veil.

    Here is an example: David has a C-Corporation, and takes minutes. However, he refers to himself as a "member" of his C-Corporation. 

    The problem: Any business person (or attorney) knows that C-Corporations don't have "members", they have "shareholders" (LLCs have "members")... 

    As a seasoned business person, I would see this and know I can challenge (the legitimacy) of his business based on law of form and substance. And chances are, he probably set up his business without the guidance of a professional, so it's worth it to dig deeper and see if I can pierce his corporate veil. 

    Feel free to Private Message me if you have a more specific question. If it's too specific, of course you should consult with a reputable, experienced, ethical and currently licensed attorney.

    Blessings!

    Zap Martin, MBA

    1Reply
  • Lee Zap Martin
    Investor · Las Vegas, NV · Member since 2014 · 19 posts · 12 votes
    10y

    Hey @David Zheng,

    I am not an attorney, and therefore cannot give tax or legal advice. As a business owner (one of which is an LLC), I can share my thoughts.

    First - I would check with the HOA and ensure (in writing) the exception you are talking about. If it's not written down somewhere that you can read (and understand) it, then it only exists as a rumor.

    Second - If the condo property is remaining in the same LLC, LLC ownership should be irrelevant, as everything will be the same except the new owner of the LLC (you). 

    Third - Make sure to read (and understand) the LLC structure, minutes, and its operating agreement. You could get burned if there is something deep in the paperwork about the condo that would affect how you do business (rent collection, other investors' promissory notes, etc.).

    Last - if you are purchasing an LLC (for the first time), you should be at least be chit-chatting with an attorney, if not full-on hiring one to assist you with the purchase. A business broker may also be able to help you and could cost less than an attorney.

    I hope that helps!

    Blessings!

    Zap Martin, MBA

    www.about.me/zapmartin

    1Reply
  • Steve Vaughan
    Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    10y
    Originally posted by @Jay Hinrichs:

    @?steve Vaughan  

    yes lots of questions and no answers.. probably swamped with off line PM questions and answers

     That may be, Jay, but wouldn't you take a sec and say as much?  I would.  "Ask me anything" is a generous offer if a bit broad lol.

    My guess is this can of worms once opened, was just too much.  The poor guy was slammed! I appreciate him trying to help, though. Hopefully he will be back.

    1Reply
  • Lee Zap Martin
    Investor · Las Vegas, NV · Member since 2014 · 19 posts · 12 votes
    10y

    Good morning @Jon S.

    This is what I know about mileage deduction... feel free to confirm with an accountant in the Tampa area....

    Can I deduct mileage if I have more than one job or location?

    Yes, if you regularly work at two or more places in one day, whether or not for the same employer, you can deduct mileage from your first job location to the second job location.

    Note: The mileage from your home to the 1st job and from the last location to your home would be commuting miles and are not deductible.

    What if I have a temporary work site?

    If you have a temporary work site, you might be able to deduct that mileage.

    To determine if your temporary mileage is deductible, check out the IRS chart below, or refer to IRS Publication 463 for a discussion of temporary work mileage.

    I hope this helps!

    Blessings!

    Zap Martin, MBA

    www.about.me/zapmartin

    1Reply
  • Kimberly H.
    Residential Real Estate Broker · Chicago Suburbs, IL · Member since 2013 · 1k+ posts · 594 votes
    10y

    @Lee Zap Martin thanks, not to sound unappreciative but I know all that, what drives me nuts is that every attorney has some different answer that they speak of like its fact and not opinion, which it must be if they all contradict each other, or they don't do LLC work enough to really know and are presenting their guesses as fact. Beyond a corporate filing every year with the state, the LLC requirements are clear as mud. Which is why I am curious about the case law on it in my state. Going forward with any attorney I happen to speak to I plan to ask,"What is what you are telling me is based on actual outlined fact and law, what is based on case law, and what is based on your educated guess, and how many corporate veil peircings have you defended/sued for?" I didn't know to ask that until I realized the answers I was getting were all over the map.

    1Reply
  • Lee Zap Martin
    Investor · Las Vegas, NV · Member since 2014 · 19 posts · 12 votes
    10y

    @Kimberly H.

    Ah got it... 

    (Not to defend attorneys) I think part of the challenge is that each law suit is unique... they are just different enough that attorneys can't give specific answers, unless presented with a specific scenario. When I speak to my business attorney - I am advised to treat future lawsuits like a potential home burglar. The more protection I have (being insured, capitalized, having good form and substance, minutes, receipts, not commingling funds, etc.) the better. It's like having door locks, alarms, cameras, neighborhood watch, etc... I live in the Sue-Happy-State of California, and so I want to DETER lawsuits (and burglars). If suing me is less attractive than suing the next guy, that helps my business. I've found that most people are lazy, and don't do things right. So having clean books, organized structure, etc. makes me look much harder to sue than others.

    Oh - and it helps that my business attorney is also a real estate investor (with an LLC). Maybe that's the best person to ask?

    A local REI club may have connections to find one... (and let us know if you find a good one!)

    Zap Martin, MBA

    2Reply
  • Anthony Angotti
    Real Estate Agent · Pittsburgh, PA · Member since 2015 · 1k+ posts · 846 votes
    10y

    Is there anything illegal about buying a house from an estate when you are auctioning off all of their items?

    I have a friend that is an estate sale person and is looking into using his contacts to wholesale their house as well.

    0Reply
  • Kimberly H.
    Residential Real Estate Broker · Chicago Suburbs, IL · Member since 2013 · 1k+ posts · 594 votes
    10y

    @Lee Zap Martin good point on finding one who is an RE investor him or herself...

    0Reply
  • Lee Zap Martin
    Investor · Las Vegas, NV · Member since 2014 · 19 posts · 12 votes
    10y

    @David Lowe

    Hey David!

    [I am not giving you legal advice because I am not an attorney]

    Regarding your first question:

    I live in California, but have business entities out of state. I also have friends and business partners that have entities outside of the state they live.

    Your question has a lot of answers. When you say "there are any lawsuits" that's a broad question. For example, are you getting sued for an action/inaction, or your business getting sued for some act or inaction? Also, what is the foundation of the lawsuit (civil rights violation? breach of contract? criminal act?)

    Also, where did the issue take place or originate? San Diego? Online? Austin? 

    All of the above information changes what courts refer to as jurisdiction ....

    When it comes to suing a business in small claims court, you may sue any business that is organized (incorporated or established as an LLC) in your state.

    In addition, you may bring suit against any business–whether incorporated or not–if one of the following conditions is true:

    • the business was responsible for injuring you or damaging your property in your state and you can find a way to serve your court papers on the business in your state
    • the business breaches a contract with you that was negotiated or was to be performed in your state and you can find a way to serve your court papers on the business in your state
    • the business has an office, warehouse, retail establishment, restaurant, or other physical facility here, even if that business is headquartered or organized elsewhere, or
    • the business does regular business in your state by selling products or services, employing a sales rep who calls on you personally or by phone to solicit business, sending you a catalog to solicit your business, or placing advertising in your state's media.

    The short story about suing out-of-state businesses. What it comes down to is that most large national businesses can be sued in any state, but smaller businesses that are headquartered in another state, do not business in your state, and have no physical presence in your state can be sued only in the states where they operate. Again, keep in mind all of the original questions (at the top) that may apply to your specific situation.

    I hope that helps!

    Zap Martin, MBA

    www.about.me/zapmartin

    0Reply
  • Lee Zap Martin
    Investor · Las Vegas, NV · Member since 2014 · 19 posts · 12 votes
    10y

    @David Lowe

    Regarding your second question (how to incorporate) - that depends on what you want to do? Flips?Buy-and Hold? Wholesale? Lease Options?

    Is it just you, or do you have partner investors? Are you married, and what's your spouses involvement in the business? What's your earned (W-2) income look like and do you plan to K-1 earnings from your business? 

    There are many factors to consider.... 

    I have an S-Corp, a C-Corp and an LLC in different states for different reasons. Thus, your question requires more information to make an informed decision.

    Feel free to message me if you want to explain your goals as a business.

    Zap Martin, MBA

    0Reply
  • Matthew Kreitzer
    Attorney · Winchester, VA · Member since 2015 · 726 posts · 387 votes
    10y
    Originally posted by @Kimberly H.:

    @Lee Zap Martin thanks, not to sound unappreciative but I know all that, what drives me nuts is that every attorney has some different answer that they speak of like its fact and not opinion, which it must be if they all contradict each other, or they don't do LLC work enough to really know and are presenting their guesses as fact. Beyond a corporate filing every year with the state, the LLC requirements are clear as mud. Which is why I am curious about the case law on it in my state. Going forward with any attorney I happen to speak to I plan to ask,"What is what you are telling me is based on actual outlined fact and law, what is based on case law, and what is based on your educated guess, and how many corporate veil peircings have you defended/sued for?" I didn't know to ask that until I realized the answers I was getting were all over the map.

     We give conflicting advice primarily because the law doesn't have clear cut answers. It only has best answers. Take some time to look up some Bar Exam sample questions and you will see what I mean. We argue in "best results" when we are in Court, and there are very few legal problems that can be answered with a quick, definitive answer. All legal analysis is highly;

    A) Fact intensive

    B) Locality intensive

    Facts and the Judges you are appearing before will ultimately determine how your case plays out. Yes, there are decades of case law for us to rely on. Yes, there are statutes for us to read. However, no one source will provide the definitive answer. Judges are prone to hand waiving in the name of what is fair and equitable. It takes an experienced, trained, and local attorney to make a prediction with any kind of clarity. A lawyer's best weapon is knowing the decision makers.

    1Reply
  • David Lowe
    Realtor · Denver, CO · Member since 2016 · 162 posts · 37 votes
    10y

    @Lee Zap Martin

     I am not being sued I was just asking as a hypothetical. Thanks for your feedback and obviously hope this time doesn't arrive! 

    0Reply
  • Kimberly H.
    Residential Real Estate Broker · Chicago Suburbs, IL · Member since 2013 · 1k+ posts · 594 votes
    10y

    @Matthew Kreitzer I don't need to look up bar exam questions to understand that. I understand that law is open to interpretation when definition isn't given. And that judges ultimately rule how they do and what judge you wind up in front of can and will change the outcome. My frustration lies in the fact that the answers I have gotten have been given as though they are fact, and not frammed as interpretation or as that judge on the Good Wife would direct "In my opinion...", and yes, from locally trained attorneys. Who may be completely guessing, who may be mixing up what is required of a corporation and what is required of an LLC, etc.

    0Reply
  • David Lowe
    Realtor · Denver, CO · Member since 2016 · 162 posts · 37 votes
    10y
    0Reply
  • Matthew Kreitzer
    Attorney · Winchester, VA · Member since 2015 · 726 posts · 387 votes
    10y
    Originally posted by @Kimberly H.:

    @Matthew Kreitzer I don't need to look up bar exam questions to understand that. I understand that law is open to interpretation when definition isn't given. And that judges ultimately rule how they do and what judge you wind up in front of can and will change the outcome. My frustration lies in the fact that the answers I have gotten have been given as though they are fact, and not frammed as interpretation or as that judge on the Good Wife would direct "In my opinion...", and yes, from locally trained attorneys. Who may be completely guessing, who may be mixing up what is required of a corporation and what is required of an LLC, etc.

     I am sorry that you have received poor customer service from your attorneys. There are at least some attorneys out there who, to the detriment of our profession, try to maintain mystique of infallibility, and make clients mad when they lose.

    1Reply
  • David Zheng
    Investor · Saint Louis, MO · Member since 2016 · 970 posts · 1k+ votes
    10y

    @Lee Zap Martin Thank you very much for all that information :)

    0Reply
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