Asset protection/ CashFlow Help

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Asset protection/ CashFlow Help

Jordan Bradberry
Kansas City, MO · Member since 2017 · 29 posts · 3 votes

Hello All,

I own four properties, which include a duplex, a condo, a single-family home, and my primary residence. I've been researching ways to protect my assets effectively, and I'm considering creating an LLC owned by a C Corp, which in turn is owned by my trust that holds all my assets. I would appreciate hearing your thoughts on this approach or any suggestions you may have for my situation.

Additionally, I have two open Home Equity Lines of Credit (HELOCs). One has a limit of $87,000 with a monthly payment of $515, and it's on my duplex. The other has a limit of $97,000 with a monthly payment of $1,057. I've used the entire $97,000 HELOC to purchase a property in cash, which is generating $1,195 in monthly cash flow. I've also used $45,000 from the $87,000 HELOC to purchase and renovate my primary home. I would greatly appreciate your advice and guidance on these matters.

Thank you.

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Ned CareyPro Member
Moderator
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
3y

@Jordan Bradberry I think you are way over complicating things. There is a cost to complexity. For only 4 properties unless you have significant net worth already this is overkill. 

If the LLC is wholely owned by the C corp it is a diregarded entity which make the C corp the owner of the property in IRS' eyes. A C corp is a terrible way to hole title to real estate.

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  • Ryan Gillette
    W Hartford, CT · Member since 2015 · 130 posts · 77 votes
    3y

    Are the lenders on those notes going to allow you to transfer title out of your name? Typically a transfer accelerates the note. 

    If you do transfer and cross your fingers they don't call the note, you may still have issues comingling corporate assets (rent) paying personal debt (mortgage) which kind of defeats the purpose.

    A less talked about approach to asset protection is good insurance. If a tenant is injured, wouldn't it be better to have $2M policy and insurance fighting it, rather than a cheap policy you exceed and now fight on your own or forfeit your LLC and then pray you didn't violate anything the tenant's attorney could use to break that protection and go after your other personal assets.

    1Reply
  • Jordan Bradberry
    OP
    Kansas City, MO · Member since 2017 · 29 posts · 3 votes
    3y

    @Ryan Gillette great idea, so are you referring to an umbrella policy? Wouldn't a 2M policy cost a ton?

    1Reply
  • Mike S.
    Investor · Broward County, FL · Member since 2018 · 1k+ posts · 938 votes
    3y

    I would not recommend to have your C corp owning any asset. You can use a C corp as a management entity, but you don't want passive income nor real estate in a C corp.

    The structure I am using is one local single member, member managed LLC per property. All these LLCs have a WY multimember , manager managed holding LLC as the member. Some of the properties are also in a land trust, with the beneficiary as the local LLC.

    My living trust is 99% member of the WY holding LLC, 1% is a my management C-Corp.

    My personal residence is in the living trust, and not in an LLC as in Florida I have unlimited homestead protection
    (to be more exact, it is a enhanced life estate deed or Lady Bird deed, where the property will transfer to the living trust upon death).

    All my brokerage accounts and other non dangerous assets are under the WY LLC.

    2Reply
  • Sarah KensingerPro Member
    Real Estate Consultant · OH · Member since 2023 · 2k+ posts · 1k+ votes
    3y

    You need to check out Anderson Advisors and for sure take advantage of their free 45 minute call. They can definitely help you build out the best asset protection plan for what you have.

    [email protected]330-557-3021
    2Reply
  • Mike S.
    Investor · Broward County, FL · Member since 2018 · 1k+ posts · 938 votes
    3y
    Quote from @Sarah Kensinger:

    You need to check out Anderson Advisors and for sure take advantage of their free 45 minute call. They can definitely help you build out the best asset protection plan for what you have.


    Especially, spend the time to watch their comprehensive Youtube library that contains hours of educative materials.
    1Reply
  • Sarah KensingerPro Member
    Real Estate Consultant · OH · Member since 2023 · 2k+ posts · 1k+ votes
    3y
    Quote from @Mike S.:
    Quote from @Sarah Kensinger:

    You need to check out Anderson Advisors and for sure take advantage of their free 45 minute call. They can definitely help you build out the best asset protection plan for what you have.


    Especially, spend the time to watch their comprehensive Youtube library that contains hours of educative materials.
    We're actually platinum members so we have access to a whole library now. I love how educational minded Anderson Advisors are!
    [email protected]330-557-3021
    1Reply
  • Ned CareyPro Member
    Moderator
    Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
    3y

    @Jordan Bradberry I think you are way over complicating things. There is a cost to complexity. For only 4 properties unless you have significant net worth already this is overkill. 

    If the LLC is wholely owned by the C corp it is a diregarded entity which make the C corp the owner of the property in IRS' eyes. A C corp is a terrible way to hole title to real estate.

    2Reply
  • Issa Santos
    Member since 2023 · 35 posts · 0 votes
    2y
    Im learning lots from this channel. Also ran across Scott Smith with Royal Legal. It seems great but I reached out to them by phone several times with not one call back or anyone answering which seemed weird. Anyone familiar with them? 

    Quote from @Sarah Kensinger:

    You need to check out Anderson Advisors and for sure take advantage of their free 45 minute call. They can definitely help you build out the best asset protection plan for what you have.


    0Reply
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