All Forum Posts by: Chris Titcomb

Look forward to connecting, Mukesh!

@Brynn Misener, @Scott Yanta, I regularly recommend the series LLC to my Illinois real estate investor clients. But as we all know, real estate investing always requires an analysis of risk, and I like to discuss the uncertainties surrounding this form of entity before we file with the SOS. So, the question always becomes, what's the risk of forming a series LLC to hold my real estate assets versus forming individual entities; entities that have more developed case law supporting their structures? My clients believe (myself included) that the series LLC rewards outweigh the risk. And here's the general format of the discussion that ensues..

There are clear advantages for using the series LLC structure: one series LLC essentially provides the same benefits as multiple LLCs but for significantly reduced costs. You aren't paying for multiple filings, fees, annual reports, and in some cases, tax returns that would come with traditional LLCs.

However, the strength of its liability protections and the legal ramifications of the relationships of the series to each other and to the master LLC have not been tested to any great extent by litigation. The last time I checked, only 17 US states have adopted the series LLC structure. Whether the courts of a non-series LLC state would respect the liability shields of a series LLC is not known.

The IRS has issued proposed regulations providing insight into the IRS’ treatment of these entities:

1) Each series within a series LLC will be treated as a separate entity for federal income tax purposes;

2) Each series is allowed to choose its own entity classification independent of the classification of other series; and

3) Each series should only be liable for federal income taxes related to that series.

The proposed regulations do not address the entity status of a series organization for federal tax purposes nor do the proposed regulations specifically address whether each series within a series LLC should obtain a separate employer identification number (EIN) and file a separate federal tax return.

Until final regulations are issued, I advise clients to obtain separate EINs and file separate income tax returns for each separate series which, I believe, helps each series maintain separate and distinct corporate identities, thereby reducing the risk anyone may be able attached a judgment to you or another series and pierce the corporate veil.

Other ways to minimize the chance that one series may be held liable for liabilities of the entity as a whole (or another series) include the following:

1) Create a separate bank account for each series (again, you’ll need a separate EIN to do this)

2) Don’t commingle funds within series.

3) Always sign documents in the name of the series.

4) Properly document all loans between series.

5) Conduct all transactions between series in an arms'-length manner at fair market prices using appraisals.

6) Keep the assets and operations of each series separate from the other series. Each asset should be owned solely by one series. In other words, two or more series should not be co-owners of the same property.

7) Make sure each series is adequately capitalized.

Good luck with your investing and if you have any other questions, feel free to PM me or contact me directly.

@Mukesh Yadav, I am a RE attorney that represents clients throughout Chicago, including the southern suburbs.  If you'd like to discuss your issue, I'm happy to help.  Feel free to PM me or contact me directly.  

@Dave Madoch, PM me.  I have an off-market deal that may work for you - it's a 2 unit multi in UK Village/East Humboldt Park, with a non-conforming third unit.

I found mine on hubzu and it turned out to be a nice quick condo flip.  The numbers made sense and it was in Logan Square.

Anthony Kondor , I'll PM you my contact info later this afternoon

Anthony Kondor - Anonymity is one of the advantages of a land trust, making it exceedingly difficult or impossible to find the name of the beneficiary/owner. However, sometimes you can find the owner by looking at the recorder of deeds site. If the owner didnt initially buy in the name of the landtrust you can sometimes find their name on the deed that was recorded before the deed that conveys ownership in the landtrust, or you can also look to see where tax bills are mailed; sometimes the owner doesnt want to pay extra for chicago title to accept mailings, like tax bills, and their name will appear on the county treasurers site. Good luck with your search!

@Dan A., without actually reading the lease, I can let you know that the tenant has lease rights and, in all likelihood, will be able to remain in possession of the unit until the end of the lease term, if he/she wants to.  If you've read through the lease, I'll assume there isn't an early termination clause.  Best case scenario, your tenant agrees to leave early.  Worst case scenario, let's assume he/she decides to stay until the lease expires AND lets assume you find a new buyer that wants to close before the lease expiration date.  You can always close and have the new buyer take title subject to the existing lease.  Many buyers are willing to do that...

Sign me up too! I've lived in River North for the past 10 years. I'm an active RE investor and I've recently been targeting judicial sales. I don't want to waste my time with any sort of sales pitch meetings and would be very interested in finding a good quality REI group. If anyone wants to meet one on one and chat real estate, I'm always available for coffee as well.

You may be able to look up the property on the county treasurer's office and figure out the "tax formula" for your property; if available, it may show the tax rate.