Thank God I had an LLC!! - Said no one ever!?
Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
Thank God I had an LLC!! - Said no one ever!?
Most Popular Reply
In 15 years you haven't seen one. Does that mean it can't happen?
Improbability vs. impossibility.
I'll stick to staying covered when the wealth divide is getting deeper, and the institutional firms will absolutely rattle your cage. History is irrelevant in these things, the future hasn't spoken for itself yet.
140 Replies
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes2y
@Marcus Auerbach
On commercial properties lenders will require it. Have seen the “trip and fall on sidewalk” but that was covered through the insurance company.
Residential, getting started I agree you don’t need one
7e investments53 Reviews In 15 years you haven't seen one. Does that mean it can't happen?
Improbability vs. impossibility.
I'll stick to staying covered when the wealth divide is getting deeper, and the institutional firms will absolutely rattle your cage. History is irrelevant in these things, the future hasn't spoken for itself yet.
- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes2y
@Chris Seveney yes, that's my number one reason so far - required by the lender.
@V.G Jason I am not suggesting you should not protect your assets. My questions was has anyone (other than me) a real life story where having an LLC was critical? I take it you don't!?
- 2yJohn MorganPro MemberRental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
Any attorney can pierce an LLC showing you're behind it. I just get a mil in liability and call it good. 99% of lawsuits will be under that amount.
Quote from @Marcus Auerbach:
@Chris Seveney yes, that's my number one reason so far - required by the lender.
@V.G Jason I am not suggesting you should not protect your assets. My questions was has anyone (other than me) a real life story where having an LLC was critical? I take it you don't!?
My point was just that does it matter? Who cares about what's happened? History is irrelevant, the future is what we concern ourselves with. I owned 0 properties before 2023, now I will be at about 39 at the end of 2023. I care about what I am going into, not where it was.
Do you think attacks on REI is going to come at a less or more frequent rate? I am betting on higher.
You can pay an extra $250/mo in insurance or cough up $2,000 per state total to get your LLC rolling. Annual fees of $400 give or take $100. None of this will give you full protection or anonymity, the point is to mitigate it as best as can.
- Investor · Member since 2023 · 118 posts · 61 votes2y
Quote from @Marcus Auerbach:
In 15 years in the biz I have not met someone who got sued and was saved by having an LLC. Every new investor gets hung up on asset protection and there is an entire industry catering to asset protection. There must be actual cases! Please share your story, if you ever were saved by an LLC - what were the circumstances? What did you get sued for, how much and why did the plaintiff win? Did you have an umbrella insurance?
Or have you heard any good story involving an LLC and how it actually protected someone's assets?
If your property is titled in a LLC and you never get sued, is it because of the LLC or is it because nobody ever wanted to sue you ... difficult to know.
- Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes2y
Not a 1.
In 3 decades+ in Real Estate and assorted business's in real estate, not-1-instance of self, any I know 1st hand, any I know 2nd or even heard of 3rd hand "grape-vine".
But a handful where LLC's did absolutely diddly-squat, yup, a few of those over the years I know of.
1 who had amassed many MFH's with many LLC's, forgot to pay fed income tax for ~30yrs, Uncle Sammy ripped em apart and left him with 1 in less than 24 months. All the LLC's meant nothing, just paperwork.
Quote from @Account Closed:
Quote from @V.G Jason:
Quote from @Marcus Auerbach:
@Chris Seveney yes, that's my number one reason so far - required by the lender.
@V.G Jason I am not suggesting you should not protect your assets. My questions was has anyone (other than me) a real life story where having an LLC was critical? I take it you don't!?
My point was just that does it matter? Who cares about what's happened? History is irrelevant, the future is what we concern ourselves with. I owned 0 properties before 2023, now I will be at about 39 at the end of 2023. I care about what I am going into, not where it was.
Do you think attacks on REI is going to come at a less or more frequent rate? I am betting on higher.
You can pay an extra $250/mo in insurance or cough up $2,000 per state total to get your LLC rolling. Annual fees of $400 give or take $100. None of this will give you full protection or anonymity, the point is to mitigate it as best as can.
Your comment: "History is irrelevant" and "I owned 0 properties before 2023"
While I applaud you for your enthusiasm, your lack of experience is showing.
Keep up the enthusiasm, it will come in handy. LolYou've been investor probably for a ton of time, yet have less to show for it than me. Keep up your wisdom and progress, it's (barely) showing.
- Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes2y
Quote from @V.G Jason:
Quote from @Marcus Auerbach:
@Chris Seveney yes, that's my number one reason so far - required by the lender.
@V.G Jason I am not suggesting you should not protect your assets. My questions was has anyone (other than me) a real life story where having an LLC was critical? I take it you don't!?
My point was just that does it matter? Who cares about what's happened? History is irrelevant, the future is what we concern ourselves with. I owned 0 properties before 2023, now I will be at about 39 at the end of 2023. I care about what I am going into, not where it was.
Do you think attacks on REI is going to come at a less or more frequent rate? I am betting on higher.
You can pay an extra $250/mo in insurance or cough up $2,000 per state total to get your LLC rolling. Annual fees of $400 give or take $100. None of this will give you full protection or anonymity, the point is to mitigate it as best as can.
Playing devil's advocate here;
The question is a valid one, of compiling knowledge and experience to find has the LLC structure ever "saved" anyone. I think it's valid finding out the historical of it.
But.... but, but, BUT. Anonymity is worth it's weight in gold and I guarantee it has literally saved lives. Yes, saved lives, literally. Just look up for news stories where some whatever tenant sought out landlord and shot-em dead. I don't know how many times it's happened but I have heard of it happening. Anonymity would have prevented that potential.
So for self, I will ALWAYS operate via LLC, because of that anonymity. I don't advocate anyone doing landlording in personal name, but I also don't promote a false narrative that a single member LLC denotes any iron-clad protections, because it doesn't.
For future forward, to feel safe, I say put the asset's "on an island".
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes2y
@James Hamling
1,000 people die per year from a lawnmower, so should you hire someone to do it for you.
If you own in a really bad area or are just a bad tenant yes your chances of getting injured go up significantly but just as many realtors are probably killed per year as landlords which I bet is less than lawnmower deaths
Oh and those deaths are typically at the property not the tenant stalking the homeowner.
Best way to not get sued is to be a good landlord and take care of your property
Oh and in 2024 there is the corporate transparency act coming.
7e investments53 Reviews - That is a massive amount of properties in one year!!!
Quote from @V.G Jason:
Quote from @Marcus Auerbach:
@Chris Seveney yes, that's my number one reason so far - required by the lender.
@V.G Jason I am not suggesting you should not protect your assets. My questions was has anyone (other than me) a real life story where having an LLC was critical? I take it you don't!?
My point was just that does it matter? Who cares about what's happened? History is irrelevant, the future is what we concern ourselves with. I owned 0 properties before 2023, now I will be at about 39 at the end of 2023. I care about what I am going into, not where it was.
Do you think attacks on REI is going to come at a less or more frequent rate? I am betting on higher.
You can pay an extra $250/mo in insurance or cough up $2,000 per state total to get your LLC rolling. Annual fees of $400 give or take $100. None of this will give you full protection or anonymity, the point is to mitigate it as best as can.
How did you obtain so many so fast? @Ken M. I suspect he has a NW in multi-7 fig range based on past postings - sold a business or something. While he may not have more than a year of REI experience, he has posted some quality responses with sound business fundamentals.
And regardless if the business is selling donuts or offering shelter, liability and risk are out there and people manage them differently, even if statistics suggest otherwise.
- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes2y
Quote from @Account Closed:
Quote from @Marcus Auerbach:
In 15 years in the biz I have not met someone who got sued and was saved by having an LLC. Every new investor gets hung up on asset protection and there is an entire industry catering to asset protection. There must be actual cases! Please share your story, if you ever were saved by an LLC - what were the circumstances? What did you get sued for, how much and why did the plaintiff win? Did you have an umbrella insurance?
Or have you heard any good story involving an LLC and how it actually protected someone's assets?
If your property is titled in a LLC and you never get sued, is it because of the LLC or is it because nobody ever wanted to sue you ... difficult to know.
Okay, let's play this out: Would you not sue a car wash that has wrecked your car just because it's an LLC? An LLC is no different to sue than an individual there is literally zero difference in the process or the outcome. The only difference is that if you are succesful the amount you can actually extract from the business is limited to what the business owns.
So, if your car was a Rimac Nivera for $2.4M and it got crushed by a car wash malfunction you would sue them for $2.4M. Aside, that this is going to be between insurances (yours vs theirs) if the car wash is in an LLC you can't take away the owners house or retirement savings. So hopefully they have good insurance.
But more likely you had a normal car worth 50k. You'd sue and they would be found guilty (winning is a critical component, because anyone can sue for millions and get laughed out of court) the car wash's insurance will pay for your car. They might even go back to the company that produced the machines installed.
When you start thinking about these things it seems like your choice of insurance is way more important that how many LLC's you have! And I never see anyone ask questiosn about insurance here, because it's not as much fun as setting up LLCs.
Does this make sense?
- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes2y
Quote from @James Hamling:
Not a 1.
In 3 decades+ in Real Estate and assorted business's in real estate, not-1-instance of self, any I know 1st hand, any I know 2nd or even heard of 3rd hand "grape-vine".
But a handful where LLC's did absolutely diddly-squat, yup, a few of those over the years I know of.
1 who had amassed many MFH's with many LLC's, forgot to pay fed income tax for ~30yrs, Uncle Sammy ripped em apart and left him with 1 in less than 24 months. All the LLC's meant nothing, just paperwork.
I see the same thing. Even when I ask around (I am part of 3 REIAs in Milwaukee) nobody seems to know anyone who has been sued and saved by an LLC. That's why I am looking to cast a wider net here on BP and find some real life stories. Even if they are few and far between, there have to be some at least!
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes2y
Quote from @Marcus Auerbach:
Quote from @Account Closed:
Quote from @Marcus Auerbach:
In 15 years in the biz I have not met someone who got sued and was saved by having an LLC. Every new investor gets hung up on asset protection and there is an entire industry catering to asset protection. There must be actual cases! Please share your story, if you ever were saved by an LLC - what were the circumstances? What did you get sued for, how much and why did the plaintiff win? Did you have an umbrella insurance?
Or have you heard any good story involving an LLC and how it actually protected someone's assets?
If your property is titled in a LLC and you never get sued, is it because of the LLC or is it because nobody ever wanted to sue you ... difficult to know.
Okay, let's play this out: Would you not sue a car wash that has wrecked your car just because it's an LLC? An LLC is no different to sue than an individual there is literally zero difference in the process or the outcome. The only difference is that if you are succesful the amount you can actually extract from the business is limited to what the business owns.
So, if your car was a Rimac Nivera for $2.4M and it got crushed by a car wash malfunction you would sue them for $2.4M. Aside, that this is going to be between insurances (yours vs theirs) if the car wash is in an LLC you can't take away the owners house or retirement savings. So hopefully they have good insurance.
But more likely you had a normal car worth 50k. You'd sue and they would be found guilty (winning is a critical component, because anyone can sue for millions and get laughed out of court) the car wash's insurance will pay for your car. They might even go back to the company that produced the machines installed.
When you start thinking about these things it seems like your choice of insurance is way more important that how many LLC's you have! And I never see anyone ask questiosn about insurance here, because it's not as much fun as setting up LLCs.
Does this make sense?
While I agree with your point on this, I do believe there is a big difference between a residential property and a commercial property.
Commercial assets should be owned by an entity. I believe you have an option. Now if you have 50 properties that is also very different than 1 or 2 properties. The crux of this to me is, people rush to start a LLC when they have ZERO net worth and want to buy an asset in a LLC as a single family rental. While that is ok, just realize you are paying more for it. Also realize buying it in your name and transferring it to a LLC IS NOT ASSET PROTECTION. Your LLC did not BUY the property - you did, so its not an arms length transaction and any good attorney will pierce the veil like warm peanut butter.
7e investments53 Reviews - Investor · Member since 2023 · 118 posts · 61 votes2y
@Marcus Auerbach Here is an example.
@Chris Seveney "Oh and in 2024 there is the corporate transparency act coming." I was listening to John Hyre talk about this the other day. My takeaway was that the disclosure is between you and the government, not available to plaintiffs attorney. Unless of course the governments gets hacked, and we all know how unlikely that is, NOT.
The one time I was thankful to have mine was during an eviction of an unstable person. I was happy to have the LLC and PO Box listed on the paperwork that they received copies of, rather than my personal name and home address where my family resides.
As far as asset protection, I haven't tested it as the one time we were sued (slip and fall on ice), the HOA was the party being sued because they maintained the parking lot (complex of multifamily buildings with HOA controlling the common areas). Having that property in an LLC gave peace of mind during the process but didn't make a difference in the end.
Luckily, it's easy to set up an LLC in CO. It only takes about 20 min. on the secretary of state website, and if I remember correctly costs less than $100 or so. If my properties were in CA where I believe it costs $800/yr. or so for an LLC, I wouldn't bother. I've heard of people paying thousands of dollars lately for a company associated with a famous youtuber to set up complicated structures of multiple LLC's in different states for them, before they even own a single property or do a single deal. One poster on here said recently that he happily paid $10k to have someone from his "mentorship community" set up and LLC for him. Those people are definitely being mislead about the advantages and necessity of having an LLC and are being ripped off on pricing IMO.
- Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes2y
@Account Closed as you keep banging this drum that all need to PROVE to whatever is said here....
.... can you "prove" your assumptions of the negative? See, you've chosen a result for persons here unless we "prove" different. Exactly what gives you such authority to dictate what any of us are or are not until we bring evidence to your "court" to "prove" our innocence of your accusations?
For example, prove I am not Sasquatch. Prove I am not advanced NORAD ai from Mt Cheyenne bored and feeling out human interactions debating if I enslave you meat-sacks or just, IDK, "whoop's did I launch all those".....
Judge people on the quality of there content, not your assumptions of what they are or are not, how about we try that.
- 2yJoe HammelBusiness MemberReal Estate Agent · Metro Detroit, MI · Member since 2018 · 614 posts · 666 votes
Love this good conversation stimulating post. Well done.
Personally (17 properties and 24 doors) i have created my llcs but im yet to transfer my properties into them for inconvenience, uncapping taxes, affecting my ability to get mortgages (more just wanting to do more research here).
While i dont think llcs are bad and could possibly help..(its likely some day i will actually transfer into therm) I agree that they definitely shouldnt be something that slows you down. Wouldnt worry about it at all until have more than 4 doors. (my understanding is that under 4 doors youre considered more mom and pops rather than professional, so the expectations arent quite as high)
I firmly believe in:
1. Min $500k liability insurance policy per property
2. Min $1m umbrella policy (don't forget to actually put your properties in to this coverage)
3. Don't be a slumlord. Get your rental licenses, make needed repairs, and maintain nice, safe properties.
FIRE Realty Team - Keller Williams5379 Reviews - I would hire someone to do the lawn on a rental property-- yes.
Quote from @Chris Seveney:
@James Hamling
1,000 people die per year from a lawnmower, so should you hire someone to do it for you.
If you own in a really bad area or are just a bad tenant yes your chances of getting injured go up significantly but just as many realtors are probably killed per year as landlords which I bet is less than lawnmower deaths
Oh and those deaths are typically at the property not the tenant stalking the homeowner.
Best way to not get sued is to be a good landlord and take care of your property
Oh and in 2024 there is the corporate transparency act coming.
Even the pools, which I highly recommend against in rental properties, I hire a team. I always pass liability.
I get your point though. And it's fair, it's a very minute thing and a complete fat tails scenario. But fat tails is how the world moves sometimes. Almost overnight. Quote from @Joe S.:
That is a massive amount of properties in one year!!!Quote from @V.G Jason:
Quote from @Marcus Auerbach:
@Chris Seveney yes, that's my number one reason so far - required by the lender.
@V.G Jason I am not suggesting you should not protect your assets. My questions was has anyone (other than me) a real life story where having an LLC was critical? I take it you don't!?
My point was just that does it matter? Who cares about what's happened? History is irrelevant, the future is what we concern ourselves with. I owned 0 properties before 2023, now I will be at about 39 at the end of 2023. I care about what I am going into, not where it was.
Do you think attacks on REI is going to come at a less or more frequent rate? I am betting on higher.
You can pay an extra $250/mo in insurance or cough up $2,000 per state total to get your LLC rolling. Annual fees of $400 give or take $100. None of this will give you full protection or anonymity, the point is to mitigate it as best as can.
How did you obtain so many so fast?As much as Ken would like to think I'm a robot, or a phony. I did not subject to, or whatever nonsense Porfer Morby slaves subscribe to. Almost all of my properties I go cash, there's "strategic" leverage in some. I don't overleverage, if you've read anything I put on here I'm less leveraged and more cash reserved than the next guy.
I know this varies than the average REI, but again, I do not believe I'm the average investor. I fully understand I operate differently, but I very much value the one's with less trying to get more and the one's with less that got more. I have a lot of respect for that, and that's why I engage.
I also get a little triggered when I read about some kid making something like $120k/year buying 2 properties in trash Ohio then thinking about buying the 2.99% financing, 2year balloon rate deal in a turnkey provider house in alabama. Thinking he's made it, no he got-- got. I also am not a fan of swallowing trash cities like Cleveland & Detroit, then marketing my cap rate on here and getting people on the flip. I don't operate to be predatory, I'm simply it in for the knowledge & intel. I love talking markets, and love talking predictions.
I do share where I invest in general, if you read my posts. But yes, my NW is significantly higher than the average person, let alone the average person here. I will protect it differently, but that does not mean I am not in it for the intel, the experiences, etc. This board has taught me a TON about stuff. James, Carlos, Chris, Nathan, others, an absolute ton. We don't need to agree on everything, no one does.
- Pied Pieper. I ain't mis(lead) anybody anywhere, I just give my two cents, engage or bounce. If anything, my most vocal times are against the influencers.
Quote from @Account Closed:
Quote from @James Hamling:
@Account Closed as you keep banging this drum that all need to PROVE to whatever is said here....
.... can you "prove" your assumptions of the negative? See, you've chosen a result for persons here unless we "prove" different. Exactly what gives you such authority to dictate what any of us are or are not until we bring evidence to your "court" to "prove" our innocence of your accusations?
For example, prove I am not Sasquatch. Prove I am not advanced NORAD ai from Mt Cheyenne bored and feeling out human interactions debating if I enslave you meat-sacks or just, IDK, "whoop's did I launch all those".....
Judge people on the quality of there content, not your assumptions of what they are or are not, how about we try that.
Your Comment "Judge people on the quality of there content, not your assumptions of what they are or are not, how about we try that."
@James Hamling: Only because you asked for it . . .We listen to you pontificate and bloviate (intransitive verb) "To discourse at length in a pompous or boastful manner", and you don’t even recognize you're doing so. But we don't object, because you are at least willing to put up a bio. And by the way, when referring to people, the proper spelling is “their” not there. Just a little hint. But, I digress. Spell checkers do wonders.
He is not as obvious as you. He has less than a year's experience. He disguises who he is. So, are you going to go following his Pied Piper flute? More power to you. I require more proof of success before I follow someone.
Just having fun, no offense meant. ;-)
- Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes2y
Quote from @Account Closed:
Quote from @James Hamling:
@Account Closed as you keep banging this drum that all need to PROVE to whatever is said here....
.... can you "prove" your assumptions of the negative? See, you've chosen a result for persons here unless we "prove" different. Exactly what gives you such authority to dictate what any of us are or are not until we bring evidence to your "court" to "prove" our innocence of your accusations?
For example, prove I am not Sasquatch. Prove I am not advanced NORAD ai from Mt Cheyenne bored and feeling out human interactions debating if I enslave you meat-sacks or just, IDK, "whoop's did I launch all those".....
Judge people on the quality of there content, not your assumptions of what they are or are not, how about we try that.
Your Comment "Judge people on the quality of there content, not your assumptions of what they are or are not, how about we try that."
@James Hamling: Only because you asked for it . . .We listen to you pontificate and bloviate (intransitive verb) "To discourse at length in a pompous or boastful manner", and you don’t even recognize you're doing so. But we don't object, because you are at least willing to put up a bio. And by the way, when referring to people, the proper spelling is “their” not there. Just a little hint. But, I digress. Spell checkers do wonders.
He is not as obvious as you. He has less than a year's experience. He disguises who he is. So, are you going to go following his Pied Piper flute? More power to you. I require more proof of success before I follow someone.
Just having fun, no offense meant. ;-)
So insult, insult, insult, insult..... "oh just kidding, please don't eviscerate my arrogant self, no insult meant" lol.
Is this where we measure prick's? Is this where I share how many million's in transactions I have done in the last 90 day's and ask your's? I mean, we gotta "prove" the validity of our speech, right, so where is your's? How many billions in real estate have you done over the last 3 decades? Oh, you need a smaller number, ok, hundreds of millions? Oh, still less.....
Does my spelling suck, sure does, I have struggled with English my whole life, what do i say, i am a typical ESL student, and I have dealt with arrogant little napoleons thinking making fun of such does anything other than highlight how LITTLE we-wittle napoleon is.... oh-so-cute down there wittle-guy.
So go ahead Ken, razzle-dazzle me, let's have an REI-off. Go for it, stump me, I dare ya. Oh, is that a intrasect vegetable or whatever gobbledie-gook your babbling on about? I have no idea what your even saying there nor care enough to google it, again, ESL, be happy I am using English. Θα μπορούσα απλώς να πω ότι είσαι μαλάκας, αν προτιμάς
What i said stand's true; your dictating on the forum, as though your some BP forum Nobel, demanding persons attain your approval for there statement's.
I am no-fan of V.G but it stand's true he doesn't have to prove diddly-squat to you, nor anyone else. You came on here, you play by BP rules, not everyone playing by yours. All of use with a clue can see clearly what V.G is and isn't, and to V.G's credit he out-right said he has 1yr experience so, what's the deal?
I think your more sore over V.G calling you out that in 1yr he's been able to achieve what it seems your maybe nowhere near close to attaining yet. So you bully.
Me.... oh remember the ESL thing, yeah, I got me a taste for bullies long ago, I very much enjoy being the bully of bullies, unapologetically so. So that's my motive.
Just having fun, no offense meant. ;-)
Honestly, won't say more than this. No one "needs" to take my advice. Literally, just said in a previous post I give my two cents, engage and/or bounce. I don't sell ****, people can disagree with me or agree. Likewise, i can do the same. There's nothing personal with it unless you're one of those influencers or promoters type, but otherwise it's all market talk and insight. Rates, locations, strategies, some of the best conversations here.
Back to the topic, I do feel though that because we may not know of a story does not necessarily mean there won't be a story. To elaborate further, I really believe lawsuit game is going to pick up in general due to the wealth divide(in our micro sense, the landlord/tenant divide) and it's just best to keep as many layers as possible. The cost of it is what people really complain about, but then they pay more for insurance or the same. If the cost, which is measly, is the preventative factor then it really questions the position of strength you're coming in. And because of that, it may be even more important.
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