All Forum Posts by: Costin I.

@Angelina McEwen - Do you have other major assets to protect? Do you buy with a large down payment?

Make sure you have something to protect first before complicating your life with LLC creation and maintenance. The mortgage note itself (and the associated lack of substantial equity) is a form of protection. Then you need first proper insurance and umbrella insurance. And of course good property management. Read Every-Landlords-Property-Protection-Guide before deciding for more advanced asset protection structures.

With an LLC you'll likely have to get a commercial loan - meaning you'll loose one of the main advantages of house hacking, the very favorable financing options in personal name. There are ways to transfer property after, but you'll have to consult with a specialist like @Scott Smith.

Here are some graphical representations to help you in these decisons/discussions:

@Nicholas Daniels - No battle plan survives contact with the "enemy". Get started, you'll have to adjust. Your current needs aren't going to be the same with the ones in 4 years from now, nor with the ones in 8 years. And if you are talking of retirement as in never go back to work, your needs at 20 or 28 are very much different from the needs at 40 or 60. And I bet you didn't factor that in.

Regardless, get started, put your plan in actions. You'll never plough a field by turning it over in your mind.

@Austin Lair - As @Neil Narayan mentioned, I'm co-hosting two meetups actually - austin-private-lender-and-borrower-networking (on 1st Thu of the month) and how-to-invest-in-re-while-working-fte-w2-re-investing-meetup (on 3rd Thu of the month). And I can give you recommendations on some of the other RE meetups happening in Austin/Round Rock.

The W2-RE Investing is here to provide networking and information for those who are looking to get into the world of Real Estate Investing as well as a place for networking and sharing with more seasoned real estate investors looking to partner or just discuss the local North Austin real estate scene.

We are NOT about pitch-fests where you are being asked to buy into some new Guru's video training series and classes - this is not the TV Reality Show version, but the real life version, with the good, the bad and the ugly of real estate investing, investment properties and property management. This is the Tortoise story, the slow and steady investing and wealth generation, and not about the get rich quick schemes, one time lucky deal, or replacing a W2 job with another job (flipping). We ARE about networking, sharing ideas and learning from each other.

We look forward to networking with you soon at the next meetup! Meet fellow investors who are dealing with the same issues you are. Come with an open mind and be prepared to learn!

See you soon! Bring a friend and don't forget to RSVP!

@Quest IRA, Inc - 100 E Anderson Ln #100 - Austin, Texas 78752 6:30pm

The purpose of this meetup is to promote financial relationships between private lenders and borrowers by networking and education. Anyone interested in Relationship Lending is welcome at this meetup. Whether you want to lend private money or borrow private money, or just learn about the process, please come build connections with others who share the same interest. Many of our members are interested in real estate, others have a variety of investments. Some of our group have self-directed IRAs, 401Ks or other trusts. Some simply have investment accounts. All share an interest in improving their financial lives through personal relationship lending or borrowing.

@Quest IRA, Inc - 100 E Anderson Ln #100 - Austin, Texas 78752 6:30pm

@Dave Wittig - look here for an/many answer/s to your questions: 762283-should-i-get-an-llc?

@Scott Smith must be one to consult with.

@NIcholas Hamel - If you are new to REI, you should be primarily concerned with finding good deals and growing your business first. I would not suggest to look into establishing LLCs and asset protection strategies till you have at least $100-300K in equity and only after you covered properly the "other" aspects of risk management (insurance, umbrella insurance, proper property management, etc.).

Here are some diagrams to help you on this quest:

All the domains that need to be aligned/intersect for asset protection diagram:https://www.biggerpockets.com/files/user/CosIorg/file/asset-protection-spectrum-diagram - What is needed for a complete asset protection OR the domains that need to be intersected to find asset protection.

Diagram: https://www.biggerpockets.com/files/user/CosIorg/file/asspro-onion-diagram - The layers of asset protection - what, when and cost.

Decisions Flow Diagram: https://www.biggerpockets.com/files/user/CosIorg/file/asspro-cya-diagram-v6a-solo-401k

Diagram: https://www.biggerpockets.com/files/user/CosIorg/file/asset-protection-structures - How a fully implemented asset protection layout might look.

@Michael Corona - I would snowball them - pay first the one with the higher interest rate and/or interest/principal ratio. Use the cash flow from all to concentrate on that one till it brings it down where the principal portion of the payment is substantially bigger than interest payment (70% or 80%+, but that depends on personal preference). Then do the same on next one. Once it reaches 80% ratio (80% goes to principal, only 20% goes to interest) I would let them ride to completion as you wouldn't save that much by paying them down - you'll be probably better served by saving that money and investing it in other properties.

I posted a more detailed response to a slightly similar thread - what-are-you-doing-with-rental-income - read it for more info.

But Michael, you are a financial adviser, shouldn't you already have the answer? :>)

@Yulia Kaygorodtseva - your personal assets might be already protected (homestead usually is, retirement accounts are), if you buy with mortgage your equity might be small and the mortgage itself is a form of protection....make sure you have something to protect before you spend the time and money required to implement and maintain (!) asset protection strategies. Here are some graphical representations to help you on your quest: