All Forum Posts by: Costin I.

@Todd Kruger - putting a tax advantaged asset (a RE property) into a tax advantaged account (IRA or 401K), according to some, tends to cancel the advantages. From that perspective, you are better served doing HML and private lending from your tax deferred accounts.

Also, IMHO, you should pay the taxes on the seed and not on the crop and do both from Roth accounts (tax exempt) - either the lending or holding appreciating properties.

@Melissa Williams, unless you have substantial amounts of other personal assets or plan on working with partners, the LLC question should come later in your plan. Concentrate on getting a few deals going and creating some equity or cashflow to protect first, then worry about how to do it.

Do you foresee getting several big deals with large amount of equity and thousands in cash flow in the next 6 months (like, buying a 1M+ of assets soon)? If not, concentrate on getting a deal going. If yes, then you need specialized answers from asset protection lawyers, not free advice from forums.

PM if you want to chat more on your questions - I can give you the investor perspective, as I been on the path you follow.

@Stephen Shelton - they can trim the branches crossing over their property line... as long it doesn't affect the health of the tree. If they go crazy on it (maybe because more of the tree is over their property) and they cut it too much the tree can die (heck, if you are not careful in the trimming process and seal the cuts, it can also get infected/infested, end result same, dead tree later) or worse, become unbalanced and prone to crashing on your property or his - so make them aware of that.

@David Ferreras - nothing stops them from suing you. But if you have an LLC, and nothing else to show up as your assets (because you used land trusts to give you a layer of anonymity and a simple search is not revealing you are owning many other juicy assets) an ambulance chasing lawyer working on contingency will see a small target on your back and hard to get proceeds from victory in a lengthy lawsuit and move onto easier paydays.

If you get sued, and you lose (probably because you end up in a situation where insurance doesn't cover you, usually due to gross negligence or fraud), the LLC will limit the damage (depending on the protection offered in your state) to just a charging order or to what is owned by that LLC (that's why you have to consider what else you place in that LLC).

Keep in mind, a properly structured asset protection and LLCs will protect you also from "external" lawsuits - like when you make burn's out in that yellow Ferrari @Marcus Auerbach mentioned and you accidentally hit your friend Bentley, break his little toe, and he's nice enough to sue you for all you own - not only from your tenants.

@Jim G. - I'm not a specialist, talk with @Scott Smith for details on DST - he is a specialist and wrote plenty of material on the subject and DSTs. Just look at his forum posts ( https://www.biggerpockets.com/posts/user/scottroyalsmith ) - here are some:

delaware-statutory-trusts-dst-and-investors

parent-llc-california-franchise-tax

ask-me-anything-free-legal-advice

dst-delaware-statutory-trust

But this is probably what you are looking for: california-real-estate-investors-delaware-statutory-trust

Option 1 is the best IMO if you want to proceed with the acquisition. Agree and get it done.

Option 2 is like you said - tenant puts the lien on the property, before or after, or the moment he hears you are looking to evict him, and you are back to square one.

Option 3 leaves you without the property, risking in courts 2500-4000 in expenses, time and effort that will be definitely more than 1100 of option 1.

I would say it's pretty much void - it's not like it's foolproof right from the beginning as you'll leave your name and signature in all your are doing unless you are paying lots of money to an attorney to represent you in all transactions and documents.

And be careful when transferring title with QCD, as you might lose title insurance.

@Fabiola F. @John Mocker - there is a definite answer on the LLC's vs Umbrella: you need to have the Umbrella coverage regardless. LLC is not replacement for regular insurance, nor for Umbrella insurance. It's something else, a complement and you can consider it a form of insurance against litigation.

The Land Trust only gives you a layer of anonymity, it does NOT offer any legal protection. I think only in Florida a land trust has more teeth, but otherwise a land trust is not going to do much for liability protection. It also complements and often works in conjunction with an LLC, but is not a replacement for Umbrella, nor LLC.

So, to answer Fabiola questions [not a lawyer, nor CPA, so take them at the value of what you paid for this]:

1 Is the anonymity protection a lost cause at this point since ownership has already been exposed and title is now in my name since the refi?  Pretty much, you have a long trail left behind, plus a mortgage note registered in your name. 

2 Regardless of loss of anonymity, is it still worth transferring into a land trust for asset protection and especially since it is a vacation rental and I need protection against liability? Land trusts do NOT offer asset protection. It might still be worth transferring into a Land Trust for other reasons (estate planing, that layer of anonymity, ease of transfer of beneficiaries, etc.)

3 Would an umbrella policy be sufficient without the land trust and provide me with the protection & liability coverage? [As a side note: there's significant equity in the property.] You need umbrella policy regardless. Often the mortgage note is a form of asset protection, unless you have significant equity in the property. If that is sufficient in terms of liability protection is linked to many other subjective factors particular to your situation, and even then you still need to do many things outside of an LLC for risk mitigation.

Here is a diagram to help you on your quest: asspro-cya-diagram-v6a-solo-401k

@Alex Black 

1. If that is normal, then put it in the lease - renewal notice sent 6 months ahead, extension signed 5 months ahead.

2. If the PM told you over the phone the lease extension for the property in question got signed, and you have no doubt that was the case and not a misunderstanding with the other properties I understand she's managing for you, she outright lied to you and you need to fire her right away. You are still at fault for not requesting a copy of the document at that time.

All I'm saying, all this was preventable if you were to do your part of management. Nobody is going to take better care of your property and interests than yourself. Sorry, you must take ownership [ read EXTREME OWNERSHIP (E.O.) - a true leader takes 100% ownership of everything in his domain, including the outcome and everything that affects it.]

• @Adil Azad - 
  Read Dave Ramsey book "The Total Money Makeover: Classic Edition: A Proven Plan for Financial Fitness." and complete the baby steps there.
  Read Scott Trench’s book “Set for Life.”
• Read ideal-vs-desperate-investor
  Finish the school and get your degree - you'll need it later, especially if it's business management.
  Get a job first where you have W2 income. Save 50 percent after tax income. Find deals in your market. Buy at discounted prices. Rehab. Rent. Refinance. Repeat.
  Work slave job with W-2 documentation for 2 years to gain favor with banks. Freddy/Fannie conventional loans want to see those 2 years. Keep same job no matter how crappy. It's only a stepping stone to break free.
  While you are slaving, eat ramen, roommate up or live in trailer, avoid Starbucks and tuck every dollar you can squeeze out into a bank account. need 20% down and money for materials. so for 80K home (trashed), you will want 35K banked to get started, just a rough idea.
  Then, get pre-approved. Buy property. Buy another and another until you have enough equity to refinance one for large amount of cash. Take cash and start BRRRRR process (read up all you can on BRRRRR). Give boss notice. (sorry about all the school time you invested). Your free. Done.
  Find a mentor to help with the process.
  Doing an internship with someone that is serious about their business, and then making sure that you're just as serious about their business as they are, is an awesome way to gain invaluable experience and support for yourself in the long run.
  Intern with a flipper. Intern with a wholesaler. Intern with Rental Investor. Then decide what you want to do long term. You have a long journey ahead.
  Aggressively save money and buy a Multifamily 2-4 units with 3.5% FHA loan and house hack. Find a duplex/triplex that needs a little work, live in one unit rent out the rest. Raise the rents to market values and rehab to force equity and sell in 2 years to avoid capital gains. If you decide to keep the property you can refinance into a conventional loan and hopefully you have enough equity to eliminate the PMI/MIP. Then move out and repeat the process. Repeat. Do this four or five times and you'll never have to work again if you choose. [Beware = https://www.biggerpockets.com/renewsblog/house-hacking-drawbacks/]
  I would look for a 2-4 unit too house hack. You can get into these with 3.5% down for an owner occupied FHA loan. Great way to get started FHA makes sure its a cash flowing deal before they allow you to buy. And house hacking allows you to make a little off the property, and seriously subsidize your rent. And lastly, you gotta live like a college kid. Rent out rooms, go the cheap route. Having those cheap expenses will really catapult you forward financially!
  Income from RE investing is slow and boring (in a good way). The RE investing that makes fast money is not really “investing” - it’s a self-employed RE business. For example, flipping, deal finding, wholesaling, syndicating.
  Boosting your credit score is the no-brainer investment. Go on My Fico and learn the credit hacks. Do them!!!
  [Biggerpockets] is notorious for the no and no money down niche, but you really need to have a good financial runway prior to investing otherwise you will lose your bottom when it goes sideways.
  Read all the usual books. But to be honest with you, If you do not learn some construction skills, your progress will be a lot slower as contractors will be raking in the majority of your profits.
  Get a pro account on this site so you can access the PRO only blogs and avoid all the goofy stuff that can confuse you sometimes.
  Take NO advice from salesmen such as realtors/brokers. Not because they are wrong, but because they are salesmen.
  Take NO advice from anyone who does not own more real estate than you do. Why chance it.
  Just keep reading, saving, researching your target area. Know the rents! Know the values.
  Do all this and you'll be on a very good path. Just remember, there are no secrets and shortcuts in real estate investing, just slow and steady progress. You want fast, you are closer to speculating than investing and your risk skyrockets​.
  "Ignorance is bliss. Knowledge is power, but also a burden. The cure to both - the 4 ions: education, action, progress(ion), not perfection".
  
  Learn to use BP to its whole potential:
  Subscribe to BP blog and podcasts and start reading posts and listening to their podcasts collection.
  Find and connect with other BP members that are in your area: http://www.biggerpockets.com/m...
  Set up keyword alerts to be notified of the topics that interest you: http://www.biggerpockets.com/a...
  Read Beginner’s Guide: http://www.biggerpockets.com/r...
  + https://www.biggerpockets.com/...
  
  You can find a glossary of some acronyms here: https://www.biggerpockets.com/...
  
  You might also want to read: The Ultimate Beginner’s Guide - https://assets2.biggerpockets....
  ...actually the entire section: https://www.biggerpockets.com/...
  
  BP has a whole section dedicated to education and starting up - https://www.biggerpockets.com/...
  
  Get busy with the entire Education section on BP:
  https://www.biggerpockets.com/...
  https://www.biggerpockets.com/...
  https://www.biggerpockets.com/...
  https://www.biggerpockets.com/...
  https://www.biggerpockets.com/... (including TENANTS MAINTENANCE)
  https://www.biggerpockets.com/... (and the sub section on REAL ESTATE MARKETING TOOLS & TECHNOLOGY TAXES & ACCOUNTING LEGAL TEAM)
  
  One way or another you will pay your "real estate tuition" - either in time, effort or money. My suggestion - better in time and effort, and money (through the mistakes you going to make), than paying a guru.
  
  Between BP and books and all the other podcasts and blogs available for free, you shouldn't need any paid training - don't fall for that. Just find a good mentor to shadow, someone willing to impart from his/her experience, take them to lunch and make yourself useful to them, and they will teach you.
  
  Here some recent articles good for starters:
  - one to raise you up: https://www.biggerpockets.com/...
  - one to bring you back down to earth: https://www.biggerpockets.com/...
  - one in the middle: https://www.biggerpockets.com/...
  - https://www.biggerpockets.com/...
  - https://www.biggerpockets.com/...
  - https://www.biggerpockets.com/...
  - https://www.biggerpockets.com/...
  - https://royallegalsolutions.co...
  
  You might want to read and follow these threads:
  https://www.biggerpockets.com/...
  https://www.biggerpockets.com/...
  https://www.biggerpockets.com/...
  https://www.biggerpockets.com/...
  https://www.biggerpockets.com/...
  
  Bonus for the weekend, my collection for starters (read the comments too, and then if you like the author, go check out what else they wrote):
  - https://www.biggerpockets.com/...
  - https://www.biggerpockets.com/...
  - https://www.biggerpockets.com/...
  - https://www.biggerpockets.com/...
  - https://www.biggerpockets.com/...
  - https://www.biggerpockets.com/...
  - https://www.biggerpockets.com/...
  - https://www.biggerpockets.com/...
  - https://www.biggerpockets.com/...
  - https://www.biggerpockets.com/...
  - https://www.biggerpockets.com/...
  
  If that's not enough, ping me and I'll give you a whole collection of blogs and podcasts to follow.
  
  Bonus 2:
  1) Read at least one hour per day every single day.
  2) Remember the quote by Jim Rohn "You are the average of the five people that you spend the most time with."
  3) Check for toilet paper before sitting down.