Should I create an LLC???

Question

Michael Evans · Answer

Joe, if you setup the combination of a Land Trust and LLC, it will be almost impossible to get the to actual owner of the LLC.  The actual Land Trust document, which specifies the beneficiary, is not recorded anywhere and can only be forced to be produced by a court order.  It is by far the strongest legal method for holding title without revealing the actual owner.  You also make the LLC the beneficiary of the Land Trust.  You don't make yourself the Trustee of the Land Trust or the registered agent of the LLC.  To make this as secure as possible, you have your attorney take on both of these roles.  This is how the rich stay rich and protect their assets.

You can take it even a step further by establishing a C corporation that functions as a holding company for your LLCs.  I setup this elaborate structure in 2005 because I was going through a divorce and did not want my future ex-wife to have access to or even know about property I purchased after I filed divorce papers (I used money I earned after the divorce to secure my properties so they weren't community property).  I went through a firm who specialized in setting up these types of legal entities.  You don't need anything that extensive when you start, but it's best to be aware of the type of structures you may need as you grow.  And I live in CA where everyone will sue you at a drop of a dime, especially of they know you have money.  Just some advice.

Michael Evans · Answer

You should definitely create an LLC. The purpose for an LLC is in the name: "Limited Liability". You want to shield yourself and your assets from liability. Especially since you own the property 100% clear, all of your equity is at risk if you get sued. An LLC shields and protects you (to a certain extent). You should also hold each property in a separate Land Trust and the LLC should be the beneficiary of each Land Trust. What this does is ti conceals the true ownership of each property. it also takes the properties out of your name, so if someone were to sue you and perform a title search to see what property you own, there would be no properties associated with your name. A couple of tips:

1. Google "Land Trusts for real estate investments"

2. Don't use your name in titling the trust. Use something like "123 Apple Way Land Trust".

3. Make the name of your LLC sound like its a big company, like "W. Gates Children Real Estate Investing LLC"

Hope this helps.

1. Google "Land Trusts for real estate investments"

2. Don't use your name in titling the trust.  Use something like "123 Apple Way Land Trust".

3. Make the name of your LLC sound like its a big company, like "W. Gates Children Real Estate Investing LLC"

Hope this helps.

Michael Evans · Answer

You're welcome.  They call that Unconscious Ignorance.  Once you know what you don't know, they call that Conscious Ignorance.  Then they have what they call Unconscious Knowledge and Conscious Knowledge.  My goal in life is to move from Unconscious Ignorance to Conscious Ignorance, then to Unconscious Knowledge and finally to  Conscious Knowledge.  I'm glad I was able to help you on your road in life.

God Bless You!

Christopher Mendoza · Answer

@Ken Lagana From a legal perspective, the LLC provides some benefits. But, RE isn't all about just being risk adverse and mitigating all risks, you have to consider the comments of @Jamal Pitts . Will having an LLC cause issues for you in obtaining future financing? Is there a preferred best available alternative (e.g., umbrella insurance)? Just some things to consider.

Ali Boone · Answer

I vote no. You'll have a hard time financing. Here's an article with details, and be sure to read the comments as well as they are extremely informative.

http://www.biggerpockets.com/renewsblog/2013/08/17...

Scott Gombar · Answer

Everyone that responded stating you should form an LLC is 100% right.  An LLC serves a couple of purposes, especially for rental properties.

• Protect Personal Assets
• Reduce Tax Liability

Ultimately what I am planning to do is form a corporation in a corporate friendly state, then for each rental property create an LLC, making the owner of the LLC the corporation.

That's just the tip of the iceberg.  As far as the REIT I don't know enough about it to speak on it but my understanding it's more about raising capital for future endeavors.

Rick H. · Answer

Ken Lagana - the way you framed your original post seems to concern your intentions to use borrowed funds. As posted, it implies that you want to protect yourself from those lenders that you borrower their money from.

If you borrow, holding title in an LLC or other entity will certainly restrict the availability of loans as conventional lenders will not lend to an LLC.  You could buy properties subject to existing conventional loans and acquire properties in your LLC.

From an asset protection standpoint, were you to get sued and a judgment obtained by plaintiff, a smart asset recovery company will know how to pierce the corporate veil of a single member LLC.

Many people worry about entity structuring way before they have much of anything to protect and end up creating barriers and lose flexibility by use of corp or LLC.

Insurance is cheap now. That might be a better plan.

Account Closed · Answer

If you put your proprieties in a land trust, it does not take a rocket science to find out who the owner is, and if you get sued, and they can sue you and the land trust and what are you going to do if they request a deposition are you going to lie it would not be a good idea because they might have the facts.

Joe Gore

Jonathan Wilks · Answer

The LLC might not be necessary for you currently.  It depends really on the value of the liquid cash you have tied up into the property, and value of your other assets. If that amount is pretty high at the minimum a the land trust would be beneficial. However  at some point it would be beneficial to possibly to do something like michael evans mentioned above. I also recommend to not make any trust with your name in the title it greatly complicates it  if you ever have to go to probate court.

Should I create an LLC???

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