All Forum Posts by: Costin I.

28 homes and another 10 units, all in 1 LLC is asking for big time trouble. You do need asset protection and better structuring, beyond simple insurance or even umbrella insurance (plus insurance doesn't cover you all the times and against all perils). I suggest you talk with @Scott Smith.

What made you change your mind? After all, you signed a Loan Estimate weeks before, paid non-refundable deposit and a Commitment Letter (with a clear Termination of Commitment clause) days before closing, and closed on the property.

Maybe your easier way out is to make another deal and use the loan/lender for another property and stick to your commitments. 

And for all of you, who are shooting down his project, and pointing at problems without offering answers - the kids is looking for advice, solutions and ideas. If you are experienced investors and accomplished projects before, why not help him with how it can be done, constructive advice, something more than defeatist and cynic comments?

I been playing with the idea of container habitats for a long while now, collecting sites, books and ideas. So far, I only have the ideas, and time flies by every day, soon to be regrets. So my advice to you: Go for it! Go big or bust!

@Suzane Ivas Can you please post an update on your experience with Housing Alerts system?

Do you pay your home insurance to brag about the lightning hit and consequent fire and call that a success? Or care to explain how your car insurance saved you from totaling your car? I would say the absence of these incidents is a success. Asset protection is a form of insurance against litigation. 

Here is another thread you might find it related to your question: https://www.biggerpockets.com/forums/51/topics/551672-asset-protectiondoes-it-even-matter

And another: https://www.biggerpockets.com/forums/48/topics/509923-when-has-an-llc-actually-saved-your-assets

1. Build your reserves first - 6 months of mortgage, taxes and insurance.

2. Build your CapEx reserves.

3. Snowball them - pay off first the one with highest interest rate, then move onto the next one with highest rate. I wouldn't touch the ones with less than 5% rate either - you will not get better loans nowadays and likely in the future - might as well leave them alone. 

4. Check to see how your net rental income and tax footprint changes in the process. You might discover that you might have "too much" rental income and you'll have to pay additional tax. In which case, your extra money might be better deployed into getting more deals.

Actually, that would be my suggestion - pay the highest interest rate (for the ones above 5%) till you bring it to the point the principal/interest ratio is substantial (like 80%/20%) and then stop - the note itself will act as asset protection. Then accumulate the money and/to get more deals.

You might want to double check on the quit claim deed transfer method - usually is not transferring the title insurance.

@Patricia Smith - I spent numerous hours researching from multiple sources the whole LLC question and asset protection matter and all the rabbit holes it opens. I gathered all my notes in a 50+ pages document touching on formation and maintenance of LLC and business structures, transferring assets, protection strategies, trusts, anonymity, insurance, levels of protection, etc. including when you should do it, how many properties per LLC, due on sale clause, selecting an attorney, fees, checklists and resource materials.

There is no absolute answer and unique tool/strategy in anything real estate. You need to learn how to use all the tools available to you (financing, insurance, management, etc.) and to understand how they fit together in your toolbox, as none will give you everything (e.g, insurance is required and it will cover you for many situations, but not always; asset protection (LLC) is litigation insurance and complements regular insurance, by minimizing the target and making it unappealing).

If you are a new investor, probably you will not have a lot of assets and/or equity to worry about (but even that is relative and subjective to each person tolerance to risk) so I would not worry about that till you pass that risk threshold (in my opinion 100K+ in equity, maybe 50K if you are really risk adverse) and you should be primarily concerned with finding good deals and growing your business first. Regardless, you need to implement insurance and proper management procedures, regardless of how many assets and equity you have. So, learn about that first - and a good point to start is a Nolo book (https://www.amazon.com/Every-Landlords-Property-Protection-Guide/dp/1413307000/) mentioned in the doc, it will explain about insurance, how to evaluate insurance, and then about property management, property code, proper leasing and all the way to LLC and hiring.

My notes file are primarily on asset protection, and primarily for buy&hold, but they touch on many other rabbit holes that opens from that (insurance, property management, DOS, transfers, etc.). It should save you many hours of research and hopefully clarify a lot of concepts (or at least I hope it does :>) as to why you want it and when and how. Let me know if you are interested, and I can send them to you - just send a colleague request (to exchange files need to be colleagues) or your email. 

@Matthew McNeil - you made one possible mistake - you quitclaimed the deed to the property - operation that usually doesn't carry the title insurance. It is the cheapest of the options for transferring the property, but there is a reason for that.

@Mike D'Arrigo I'm assuming the quote you posted above includes your comment - "There are some very good, reputable turn key companies right here on BP." - can you point to some of these very good, reputable turnkey companies? Thanks.