Anderson Business Advisors
Rental Property Investor · Los Angeles, CA · Member since 2015 · 30 posts · 56 votes
Anderson Business Advisors
Most Popular Reply
Developer · Boise, ID · Member since 2009 · 168 posts · 112 votes
10yKen - I haven't hired those guys but I'd argue a couple things:
1) Too many attorneys in the REI space $ell fear that you need this or that structure in order to protect your assets.
2) Too many investors get scared off by what appears to be something complex -- forming a holding company (whether LLC, LLP, C or S-corp). It's not that complex.
3) Too many investors are under-insured and fail to frequently review their insurance policies.
Bottom line is this:
1) Find a competent attorney that will give you the holding company structure of your choice (talk to your CPA, not your attorney about what is best for you) documents in a word format. It's all broiler plate anyway. You should be able to reuse your docs for each deal you do without having to go back to the attorney for a new op agreement etc.
2) Forming a LLC etc is easy. Don't get scared by the legalese or the crazy attorneys trying to sell something. A LLC is just a bucket for carrying something around. In our case, it's a piece of property. At the same time, USE your holding companies. Make sure you shift an asset into it. I'm frequently shocked by the number of people who maintain rentals in their personal name. Don't forget to run separate books and bank accounts for your holding companies and have an annual meeting.
3) Review your insurance policies frequently. Make sure you have enough insurance personally (umbrella plus good underlying liability in relationship to your net worth) and corporately (same thing - umbrella plus underlying coverage). This is your first line of defense. Your Wyoming/Nevada/Delaware LLC won't do crap for you if a tenant slips and falls. It just hides the fact that you are the owner.
Anyway, final disclaimer: I'm not an attorney or a CPA. I don't pretend to be one even on the internet. This is my advice based on what's worked for me. Don't get scared off by some attorney. Get out there, write offers and do deals.
193 Replies
- Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes5y
@Jonathan Lee, as this is your only and first post I have a few questions. Are you a client of theirs? The folks I have talked to tell about how they would remain anonymous as a huge part of this protection. What I am pointing out is it impossible to do for most investors here. How can you meet with the realtor, go look at the property, write a check for a property inspector, have it sent to your address, get a bank loan lined up using your name and SS number, using your income to qualify for it, do the rehab yourself or pay a contracting firm where you supervise the quality etc, you advertise it, your the one they call to look at it, and you do the lease signing on it, you are who they call for problems like waterline leaks, you get the checks, you do the move out inspection, and you think you can remain anonymous? Now you can set in CA, buy a few $30K rentals in Chicago, run it all through an LLC and never do any of those things. In that case an LLC gives you a massive amount of liability protection. In the first scenario you can still have protection, but no anonymity. Most folks starting out here are mom and pop organizations that do most of the work themselves and trusts will not hide them at all. In my experience reliance on trusts for protection is highly misplaced. LLcs are much better than trusts. By the way transferring property to a trust that is not a testamentary trust invokes the same right to call the loan as transferring to an LLC. Relying on the fraud working is a bad way to do business. Think about that. Why do you need custom tailoring on first 2 or 3 properties?
Wow my above answer didn't post when I wrote it a year ago wild. I would add one more fact. I notice @George L. was going to be charged $5k to set up 2 LLCs. The cost of setting up an LLC by yourself in Wyoming is literally $102 and can be done in less than 15 minutes. Now explaining how to use them and drafting an operation agreement can take a lot more time, but the cost is $102 and takes less than 15 minutes.
- Member since 2020 · 22 posts · 2 votes5y
Hi Chris. I'm considering hiring Anderson Advisors and stumbled on this old conversation. You said that if a lawsuit has merit, having a NV or WY holding company won't protect you. But if the member/manager of my CA LLCs is a WY LLC, won't that give me charging order protection? Even if someone gets a judgement against me? Thank.
Originally posted by @Chris Schu:"Does this sound like a good idea?"
Unless you have a very specific reason to do this - no. Otherwise you will continue to restructure like a hamster wheel spins - and waste $$.
Beware that a holding company or LLC in NV will not deter local (out-of-state) statutes unless whomever you contracted with signed away their local rights favoring NV law. Many states require you register your company with their SOS (or equivalent) for that very reason.
"They'll all be held by another WI LLC (by transferring my NV holding LLC to WI)."
Looks like a mutation and continuation of the original shell game (NV holding with CA LLCs). Again, what is your s-p-e-c-i-f-i-c reason for doing this? "The attorney said so..." is NOT a reason.
Although your structure will buy you some time, if the "frivolous" lawsuit has some merit and possible $$$ behind it, an aggressive attorney WILL force you to respond. In layman's terms, you can run for awhile but not "hide" as we commonly think the word means.
Source:
https://www.keytlaw.com/azllclaw/forming-llcs/nevada-incorporation-scam/
- Member since 2020 · 22 posts · 2 votes5y
Hi Lee. I'm considering hiring Anderson Advisors and stumbled upon this old conversation. You said that a WY LLC won't protect me if a tenant slips and falls. But if the member/manager of my CA LLCs is a WY LLC, won't that give me charging order protection... even if someone gets a judgement against me? Thanks!
Originally posted by @Lee G.:Ken - I haven't hired those guys but I'd argue a couple things:
1) Too many attorneys in the REI space $ell fear that you need this or that structure in order to protect your assets.
2) Too many investors get scared off by what appears to be something complex -- forming a holding company (whether LLC, LLP, C or S-corp). It's not that complex.
3) Too many investors are under-insured and fail to frequently review their insurance policies.
Bottom line is this:
1) Find a competent attorney that will give you the holding company structure of your choice (talk to your CPA, not your attorney about what is best for you) documents in a word format. It's all broiler plate anyway. You should be able to reuse your docs for each deal you do without having to go back to the attorney for a new op agreement etc.
2) Forming a LLC etc is easy. Don't get scared by the legalese or the crazy attorneys trying to sell something. A LLC is just a bucket for carrying something around. In our case, it's a piece of property. At the same time, USE your holding companies. Make sure you shift an asset into it. I'm frequently shocked by the number of people who maintain rentals in their personal name. Don't forget to run separate books and bank accounts for your holding companies and have an annual meeting.
3) Review your insurance policies frequently. Make sure you have enough insurance personally (umbrella plus good underlying liability in relationship to your net worth) and corporately (same thing - umbrella plus underlying coverage). This is your first line of defense. Your Wyoming/Nevada/Delaware LLC won't do crap for you if a tenant slips and falls. It just hides the fact that you are the owner.
Anyway, final disclaimer: I'm not an attorney or a CPA. I don't pretend to be one even on the internet. This is my advice based on what's worked for me. Don't get scared off by some attorney. Get out there, write offers and do deals.
- Member since 2019 · 1 post · 0 votes5y
Hi,
I’m wondering if you still with them and if you are satisfied or not?
Thank you,
- Bellingham, WA · Member since 2017 · 7 posts · 9 votes5y
@Jason Strange @Quenton Mullins @Wilco Ravestijn @Joe Durham @Joyce Drayton To the Anderson Business Advisors Clients, I have a question/concern about the security of your assets from Anderson, hoping you can help. I am a new Anderson Advisors Client, Anderson wants me to send my company share certificates signed & dated, to them for them to keep in WY. Anderson says this is best practice since WY has charging order protection and the physical location of shares may come into play in the unfortunate event of a lawsuit judgment against me. The share certificates have on the back of them where you can transfer share ownership, WITHOUT a new signature/notary block to do so. I am reserved about sending my shares, which represent my interest in my company (& thus it's assets) to them? Did you send yours in? Do your company share certificates have that area on the lower back of them with that "transfer verbiage"? FYI, the shares certificates are in the "Units & Ledger" tab of your company binder, you should have some unsigned blank ones left in your binder even if you sent your "50 or so" signed shares into them. Anderson said you are not required to send in your certificates, but then you may not have protection in a judgment, which is the main function of the WY holding LLC (along w/ anonymity). The main WY holding company is also the "owner" of your other LLCs, so I am picturing if your shares are transferred from your holding LLC, that is all your assets from your other LLCs as well, and possibly a living trust if that was set up with Anderson through the holding company as the base structure as well? Did you have this issue, if yes, how did you deal with it? I am concerned about "trusting". I asked
- las vegas, NV · Member since 2016 · 14 posts · 7 votes5y
Originally posted by @Trevor Levine:
Hi Chris. I'm considering hiring Anderson Advisors and stumbled on this old conversation. You said that if a lawsuit has merit, having a NV or WY holding company won't protect you. But if the member/manager of my CA LLCs is a WY LLC, won't that give me charging order protection? Even if someone gets a judgement against me? Thank.
Originally posted by @Chris Schu:"Does this sound like a good idea?"
Unless you have a very specific reason to do this - no. Otherwise you will continue to restructure like a hamster wheel spins - and waste $$.
Beware that a holding company or LLC in NV will not deter local (out-of-state) statutes unless whomever you contracted with signed away their local rights favoring NV law. Many states require you register your company with their SOS (or equivalent) for that very reason.
"They'll all be held by another WI LLC (by transferring my NV holding LLC to WI)."
Looks like a mutation and continuation of the original shell game (NV holding with CA LLCs). Again, what is your s-p-e-c-i-f-i-c reason for doing this? "The attorney said so..." is NOT a reason.
Although your structure will buy you some time, if the "frivolous" lawsuit has some merit and possible $$$ behind it, an aggressive attorney WILL force you to respond. In layman's terms, you can run for awhile but not "hide" as we commonly think the word means.
Source:
https://www.keytlaw.com/azllclaw/forming-llcs/nevada-incorporation-scam/
As Lee's good post shows, these shell games just delay the inevitable while keeping your personal name more difficult to detect. Expect BIG attorney fees for this "protection". Either way, going this route WILL cost you one way or another.
As for the intricacies of "charging orders", look here:
https://businesslawtoday.org/2... - las vegas, NV · Member since 2016 · 14 posts · 7 votes5y
@jerry W.
"drafting an operation agreement" - THIS is where many fall flat, even with LLCs.
Even in NV where "piercing the veil" is difficult, liability can be an issue by showing that the LLC was formed but not properly set up - operationally speaking. It's similar to the concept of forming a trust but not transferring assets into it which attorneys surprising "forget" to do more times than clients would like to think.
- Member since 2020 · 22 posts · 2 votes5y
I'm following your post. Want to know the same thing.
Originally posted by @Amy Harmon:@Jason Strange @Quenton Mullins @Wilco Ravestijn @Joe Durham @Joyce Drayton To the Anderson Business Advisors Clients, I have a question/concern about the security of your assets from Anderson, hoping you can help. I am a new Anderson Advisors Client, Anderson wants me to send my company share certificates signed & dated, to them for them to keep in WY. Anderson says this is best practice since WY has charging order protection and the physical location of shares may come into play in the unfortunate event of a lawsuit judgment against me. The share certificates have on the back of them where you can transfer share ownership, WITHOUT a new signature/notary block to do so. I am reserved about sending my shares, which represent my interest in my company (& thus it's assets) to them? Did you send yours in? Do your company share certificates have that area on the lower back of them with that "transfer verbiage"? FYI, the shares certificates are in the "Units & Ledger" tab of your company binder, you should have some unsigned blank ones left in your binder even if you sent your "50 or so" signed shares into them. Anderson said you are not required to send in your certificates, but then you may not have protection in a judgment, which is the main function of the WY holding LLC (along w/ anonymity). The main WY holding company is also the "owner" of your other LLCs, so I am picturing if your shares are transferred from your holding LLC, that is all your assets from your other LLCs as well, and possibly a living trust if that was set up with Anderson through the holding company as the base structure as well? Did you have this issue, if yes, how did you deal with it? I am concerned about "trusting". I asked
- Philadelphia area · Member since 2018 · 8 posts · 10 votes5y
Okay I haven't posted in the forums in a while but lately I have been doing a lot research about ways protect my properties from lawsuits while at the same time being able to grow my portfolio and gain access to capital. Like many others on this thread I came across ABA on YouTube when looking into using LLC's for property acquisitions. I have watched countless Clint videos and sat through the webinars. Like all of you, I have questions about the platinum plan and if it is the right way to go. Though I am a real estate(small) investor I have a background in Finance & Accounting but I am not a CPA. Clint and the others I've seen on ABA videos seem very knowledgeable but I can't help but think a lot of the explained strategies are may be overkill and costly, especially for those of us that are just getting started or trying to build a foundation. Protecting my assets is important but the cost of establishing and maintaining that structure shouldn't cut into the bottom line so greatly either, or should it? Where are all the Bigger Pocket CPA's and lawyers who are suppose to be part of the BP community to help us through these decisions? I mean that's what these forums are for correct.
I've only seen one person consistently responding that seems to take a different position of what ABA markets, and that is @Jerry W.. Jerry I would love to connect and hear more about how structured yourself and some advising if you're open to it.
Anyways I have the same questions and concerns as many of you and probably more. Do I really need a LLC for each property, who keeps tabs on ABA for me, should I be concerned about something going wrong doing business out of state with ABA, could I set this up on my own at this stage, why does all my business mail need to go through ABA, is it easy to leave the company if unsatisfied, I meant the list goes on.
At the same time I am trying to grow my portfolio and know this is an important step, but where is the guidance? Why is it this hard to get some help out here? Can someone recommend a lawyer or CPA in the Philadelphia area that provides the same services? A second opinion cant hurt.
- 5yGreg O'BrienBusiness MemberAccountant · Boston, MA · Member since 2019 · 386 posts · 336 votes
@Jamir G. I hear you and agree with a lot of what you said. There is no one sized fits all solution in my opinion. You will want to explore more tailored solutions you will find at a smaller or niche tax and asset protection firm. A core structure that is flexible and scalable is probable a good way to get started!
- 5yGreg O'BrienBusiness MemberAccountant · Boston, MA · Member since 2019 · 386 posts · 336 votes
@Chris Schu yes agreed, many fall flat in documentation and operations.
Recent tax court case in 2020 with a “template” operating agreement which was far different than how the partners operated led to some serious taxes/penalties levied.
- Philadelphia area · Member since 2018 · 8 posts · 10 votes5y
@Greg O'Brien thank you for replying and contributing to the conversation. I appreciate it. I’m going to take your advice and look for a small tax/asset protection firm to help me with a flexible structure.
- Rental Property Investor · Portland, OR · Member since 2009 · 82 posts · 30 votes5y
I just signed with them. Here's why:
Reason 1: anonymity. After moving my office home my name is attached to too many properties and easily findable. I manage 8 companies now all with significant public exposure. Better safe than sorry. This move will likely prevent a lawsuit, however unlikely, from happening due to unobtainable info.
Reason 2: I am reducing my administrative responsibilities as much as possible. Having them keep filings up to date is small but one less thing for my "to do" list. I'm trying to keep the "passive part" of investing alive and well. Rather than hire an assistant, I'm outsourcing and they are part of that picture.
Reason3: I'm vigilant about tax maneuvers, prom notes, and how S Corps, C corps and LLC's can interact for significant tax savings. Everyone may not be at that level, but things get complicated and to get on the phone and ask simple legal questions will be helpful, and what the tax ramification is. I had an incident last month in which I think I would already have saved money.
I've just begun with Anderson so I can't attest to value, but happy to report down the road as I'm deeper into this relationship.
- Rental Property Investor · Portland, OR · Member since 2009 · 82 posts · 30 votes5y
I just signed with them. Here's why:
Reason 1: anonymity. After moving my office home my name is attached to too many properties and easily findable. I manage 8 companies now all with significant public exposure. Better safe than sorry. This move will likely prevent a lawsuit, however unlikely, from happening due to unobtainable info.
Reason 2: I am reducing my administrative responsibilities as much as possible. Having them keep filings up to date is small but one less thing for my "to do" list. I'm trying to keep the "passive part" of investing alive and well. Rather than hire an assistant, I'm outsourcing and they are part of that picture.
Reason3: I'm vigilant about tax maneuvers, prom notes, and how S Corps, C corps and LLC's can interact for significant tax savings. Everyone may not be at that level, but things get complicated and to get on the phone and ask simple legal questions will be helpful, and what the tax ramification is. I had an incident last month in which I think I would already have saved money.
I've just begun with Anderson so I can't attest to value, but happy to report down the road as I'm deeper into this relationship.
- Member since 2021 · 1 post · 0 votes5y
Thanks Genna,
Quick question, at what point do you recommend to hire a financial advisor such as Anderson’s. I’m interested but I’m basically starting my RE business.
- Deland, FL · Member since 2017 · 2k+ posts · 1k+ votes5y
Originally posted by @Scott Smith:
@Patricia Smith and @Costin I. Apologies on the delay! I just wanted to thank you both for the kind mention. Regarding the Clayton Morris podcast, you are correct that each property you own should be in a separate LLC. However, this can be accomplished through a Series LLC. The Series LLC acts as an umbrella, a parent of sorts, and can create individual child series that are treated as separate entities. Each individual child series would then hold a property. This eliminates the need for costly filings for multiple LLCs and allows you to separate your properties. Instead of your properties being in one big pot, they are now in separate bowls. If you would like more information, please reach out. Thanks again!! And good luck on your endeavors!
So say I buy a house at 123 Elm in an LLC by the name 123 ELM. A few years later I sell doing a 1031 exchange. The new property has to hood it is LLC 123 Elm?
- 5yDave FosterBusiness MemberQualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
@Michael Plante, It depends on whether 123 Elm LLC is a regarded or disregarded entity and whether or not the new LLC will be regarded or disregarded. If both are single member LLCs that elect to be taxed as sole proprietors and do not file a tax return then they are disregarded and you could sell as 123 elm and buy as 456 Oak. Or as yourself for that matter since you are considered to be the tax payer as the activity of the property is reported on your tax return.
The 1031 Investor5137 Reviews - Deland, FL · Member since 2017 · 2k+ posts · 1k+ votes5y
Originally posted by @Dave Foster:
@Michael Plante, It depends on whether 123 Elm LLC is a regarded or disregarded entity and whether or not the new LLC will be regarded or disregarded. If both are single member LLCs that elect to be taxed as sole proprietors and do not file a tax return then they are disregarded and you could sell as 123 elm and buy as 456 Oak. Or as yourself for that matter since you are considered to be the tax payer as the activity of the property is reported on your tax return.
- Deland, FL · Member since 2017 · 2k+ posts · 1k+ votes5y
Originally posted by @Dave Foster:
@Michael Plante, It depends on whether 123 Elm LLC is a regarded or disregarded entity and whether or not the new LLC will be regarded or disregarded. If both are single member LLCs that elect to be taxed as sole proprietors and do not file a tax return then they are disregarded and you could sell as 123 elm and buy as 456 Oak. Or as yourself for that matter since you are considered to be the tax payer as the activity of the property is reported on your tax return.
you really are incredible
thank you - Morris County, NJ · Member since 2020 · 5k+ posts · 2k+ votes5y
Shouldn't a caveat be said about State tax treatment? Yes, it differs, but they don't always follow the IRS treatment that adds another layer of complexity, if not the main driver. I understand we don't address the State level issues since there are too many to consider. What do you think?
- 5yDave FosterBusiness MemberQualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
@David M., There are some differences in a few instances. More and more states are requiring a form exempting from collecting % as a withholding. PA doesn't even bother to recognize 1031 at the state level. And don't get me started on how Community property states vs non community property states have mucked up the whole LLC entity issue.
But for purposes of entity ownership and identification of actual tax payer (which was @Michael Plante's question) I don't think there's going to be any state nuance that will differ. The reason for this is that what makes an entity disregarded for Fed purposes is that the entity does not file a tax return. So all of the activity of the property is reported on the tax return for the person/entity that is the member of the disregarded entity.
So logically, if that entity doesn't file a tax return then it should be disregarded for state purposes as well. All activity of the property owned by that entity is reported on the tax return of the member of the disregarded entity. And that tax return feeds into the members personal return. I don't want to stray off the reservation here. So if there's one of our CPA brethren with more illuminating state specific examples, it's piqued my interest.
The 1031 Investor5137 Reviews - Morris County, NJ · Member since 2020 · 5k+ posts · 2k+ votes5y
Okay... I don't believe that just because Fed disregard the entity that the State filing is the same. States have their own tax codes. Many times they follow the Fed code, but not always. That's what I thought.
- 5yJuan F. SaaPro MemberInvestor · Ashburn, VA · Member since 2019 · 14 posts · 6 votes
@Jamir G., I am just getting started with my first rental and you couldn't have expressed better the frustration I have felt with the lack of resources. As @Greg O'Brien mentioned, I am concerned that those "small" mistakes that might end up being very costly.
After I created a separate post requesting CPA-related guidance and mentioning Anderson as an example of what seemed to me excessive costs at the time, I went ahead and signed up for the Business Essentials package with them about two weeks ago; this is basically the Platinum subscription plus everything needed to set up the first LLC.
I did this after building trust from the wealth of free content they make available online (the free Tax Tuesday events where they answer questions on the spot is priceless!). So far, at least for me, just the education, resources, and the couple of sessions I had with the advisors are worth the investment. They even have what they call "working hours" where and attorney and I think a tax expert are available so you can dial in and ask a question live without being charged extra; I haven't seen an attorney providing that.I am still debating the Titanium membership just because, as I said, I am getting started, though. @Genna Golden, from your description I guess you have gone Titanium, correct? If so, how is it so far?
- Investor · Sacramento, CA · Member since 2020 · 105 posts · 48 votes5y
@Juan F. Saa thanks for sharing. I met with them as well and I'm contemplating the platinum and the Tax Advantage program. I haven't heard of the business essentials... what's included in that and what's the cost?
I may open a can of worms here but what are people's thoughts on just using LegalZoom to accomplish these things for FAR cheaper?
Join the conversationCreate a free account to reply, vote on answers and follow this thread.