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!?
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V.G JasonPro Member
Investor · Member since 2022 · 3k+ posts · 3k+ votesIn 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.
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- Rental Property Investor · San Francisco Bay Area · Member since 2022 · 1k+ posts · 1k+ votes2y
Appreciate all the feedback. I'll look into the WyomingLLCAttorney.
I also heard that it's the equity in the properties and I have significant equity in two of the properties, one being in California. Not to go into exact numbers but it's a lot more than $40,000 in assets. So we should be leveraged instead of paying down our mortgages to limit our liability? Do another cash out refi at these interest rates? That's going to a significantly higher mortgage payment and the rent won't cover that amount each month.
Most of my investor friends with 1 to 4 properties in California have umbrella insurance (some of those properties are paid off or they bought it a long time ago so that's at least $1 million in equity). The only people I know with LLCs have 10+ properties.
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes2y
Quote from @Becca F.:
Appreciate all the feedback. I'll look into the WyomingLLCAttorney.
I also heard that it's the equity in the properties and I have significant equity in two of the properties, one being in California. Not to go into exact numbers but it's a lot more than $40,000 in assets. So we should be leveraged instead of paying down our mortgages to limit our liability? Do another cash out refi at these interest rates? That's going to a significantly higher mortgage payment and the rent won't cover that amount each month.
Most of my investor friends with 1 to 4 properties in California have umbrella insurance (some of those properties are paid off or they bought it a long time ago so that's at least $1 million in equity). The only people I know with LLCs have 10+ properties.
even with a wyoming LLC - if you own in california you will eventually get whacked the $900/yr fee or whatever it is. I would just get the umbrella policy.
I would also not take on leverage unless you need to or have a place to put it where it can generate significantly more income.
7e investments53 Reviews - Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes2y
For those that are interested intentional undercapitalization is the number one reason for piercing the LLC veil according to the most recent continuing legal education class I had on that subject. There is an inherent fraud in taking a company that makes huge amounts amounts of money and yet has no assets when sued. It is usually tied to an additional fraud as well. There were 38 different tests they showed that various courts used to evaluate whether to pierce the veil, but undercapitalization and fraud were the big ones used most often. You can guess that this is horribly simplified from a four hour class.
- 2yV.G JasonPro MemberInvestor · Member since 2022 · 3k+ posts · 3k+ votes
Quote from @Tim J.:
Quote from @Nathan Gesner:
I wouldn't say it's how much the houses are worth but more so how much the houses are a ratio to your net worth.
It's the equity. If you have a $600,000 property but only $85,000 in equity, it's not much of a target. If you have 100% equity, then they start to salivate. One more reason to keep your properties leveraged.
Balloon insurance is a heck of a lot cheaper and easier. The odds of someone suing a mom-and-pop landlord for more than insurance will cover? Astronomical.
This is horrible advice. "Keep properties leveraged so you limit your liability?" Seriously?
Also, I think you mean "umbrella insurance" not "balloon"...He's saying that because lawyers won't get as aggressive and helpful once they realize there's less cash available to tap into. He's not wrong. But what you do with that is creating a lending LLC, too. That has first position on the property title LLC. So it always appears leveraged. I know that's a bit much.
I mentioned this in the other thread where the lender lady ran a victory lap with fincen and LLCs. I got into a car accident with someone else(I was not the driver), and the other side is aggressively coming after the driver. This driver is very well off--at least $5M NW probably closer to $7mm-- no laywer is rushing to help the other side. It's only been a few days, but with the way the driver has his assets & operations in separate LLCs, and personal property in trust-- it proves it's point. I won't elaborate more as this is a privacy issue, but let's see where it goes in the next 2-3 weeks. I'm pretty confident that it's going to be where you haven't seen cases, because it's been enough of a deterrent to get there. Just experiencing this first hand(or second hand being the passenger) proves it's worth.
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