All Forum Posts by: Corey Duran

I own 14 doors in Toledo and haven't had anything come to my mailbox yet about needing to have my properties inspected yet.. I have been hearing for years that they are trying to pass something but haven't heard anything in over a year.

Should I be concerned? Following to see what you find in case I need to start prepping.

0 Votes

Toledo, Ohio

I have been an agent for about 6 years and do not have an LLC for this specific stream of income. I have lately been seeing this come up a lot lately from other agents. Would you recommend I do the same? Should I have an attorney form this for me? I was told it would be around $500 which sounds a bit pricey to me as I believe I know how to register an LLC in OH where I am located. However, if specific things need to be put in my articles I would rather it be done right. I am going to be the only member.

2 Votes

Toledo, Ohio

Quote from @Chris Seveney:

@Corey Duran

You cannot run multiple LLC's from one bank account and think you have asset protection.

If someone told you this I would find someone new.

I agree. I am looking for a different attorney to help me structure this. I am trying to get asset protection without a huge change to my admin work. So ultimately find out the least amount of bank accounts I need and whatnot. I am the sole member and operator of everything and have 14 doors. If I put each property into an LLC I do not want to have 14 bank accounts.. There has to be a better way. Also I do flips which would be another bank account and have a band I run for profit which would be another.. If you have any advice or someone to recommend I would truly appreciate it. Again I have no partners nor do I plan to have any as of now.

0 Votes

Quote from @Luis Alvarez:

Hey @Corey Duran,

Wanted to share my experience/background from estate planning/asset protection pov:

Personally, I have a similar structure, although I would probably separate the passive entities (rentals) from the active entities (flips, music production, etc.) because once you get to a certain level of revenue, I would want to not only capitalize on an S-Corp election (and all those tax advantages) but also separate the liability one naturally incurs on "active" businesses vs. "passive" businesses. (But that could be a thread onto itself).

Regarding the biggest issue here, using one bank account for only the holding LLC will save you a lot of extra admin work and bookkeeping, however, if I were a plaintiff attorney in a lawsuit where you are the defendant, the co-mingling of your funds amongst all your entities would be a easy way to show to the court that these entities aren't being treated separate and are ultimately an alter ego for you, in an individual capacity, and your structures (and underlying assets) could be folded into one big pot to pay out a claim. To @Erik D.'s point, if you can deposit checks made out to different entities into your holding LLC (and you can get the financial institution on board), then yes, it's a lot easier from an admin standpoint. While your tax consideration is inconsequential because they would all go to your personal tax returns anyways, from a legal standpoint, we would point out that this approach would have you in a similar position as if you had all these properties and business owned in your personal name.

I know there's a LOT of contradictory commentary on BP and the interned regarding LLCs and what they do and what they don't...one easy thing to keep in mind is that for tax purposes, the IRS doesn't recognize LLCs...tax treatment is either a sole prop, partnership, or an S-Corp. LLCs are strictly a legal asset protection tool...so long as certain corporate maintenance and formalities are adhered to. One of those is keeping separate accounts.

This is not specific legal or tax advice, but just observations from my unique perspective in planning and asset protection. Hope this helps :)

Wow great info and insight. Thank you for taking the time to share all of this with me. The idea that my attorney had was to have the one bank account be with a management company LLC that is the owner of the llcs below it. The llcs below it are the actual holding companies and the management company is the one who manages the money or is the central paymaster with one bank account. With what you said I could have two business bank accounts.. one for the passive income (Management company and the holding llcs/rentals it owns) and then another bank account for the flips, music production, etc. Do you think something like that would help? I am not opposed to having more bank accounts but I truly would love to have less admin work if possible. However, I do not want to easily open myself up to lawsuits from comingling. The management company having agreements with the holding companies to manage their properties and money is the solution my attorney came up with.

Any advice is greatly appreciated as I really wanna get a strong business structure going forward and plan to implement all of this in the next month so I am trying to do as much research as I can now. So in summary with the info of what I do. Rentals, flips, real estate agent, music production. How would you recommend I set up my structure? How many bank accounts? Should I have an LLC for my real estate agent business?

1 Vote

Quote from @Erik D.:

Quote from @Corey Duran:

Yes, my structure is Trust --< Main LLC --< Rental Property LLCs

I had an attorney handle the transition to this structure. Going forward I create a new LLC for each new acquisition.

I would just make sure your bank is okay with your Main LLC depositing checks for your Rental Property LLCs. Smaller checks are no big deal but for larger checks the bank wanted signed affidavits and proof of how to LLCs are setup. I've been told several times now that depositing large checks written out to a Rental Property LLC but deposited into the Main LLC account will be a 'one time courtesy' lol. When closing on a refinance or a sale, the title company wants to write the check out to the Rental Property LLC, which is why this happens to me.

This structure enabled me to move a line of credit from my personal name to my Main LLC which improved my personal debt to income ratio. Since the line of credit is moved to the LLC, it is basically erased from my personal credit check.

I see. I will talk to my bank about the possible check issues. I believe this structure will do well for me and it sounds like it is doing well for you. Silly question but how do you come up with the names of the LLCs? You do not have to share their names. I don't know if I should have them be a trade name or just "doing business as" when I market properties. I only have one LLC right now that is named after a band I was in and it isn't very pleasant trying to explain to people on how to spell it and whatnot.. so im trying to prevent this in the future with the restructuring.

0 Votes

Quote from @Erik D.:

I have the exact same setup and only have a bank account for the management LLC. The only issue I've had is when I have a large check from a refinance or a sale and the check is made to one of the lower LLCs and not the management LLC, the bank gets cranky and wants me to open a separate account. So far I've been able to sign the checks over to the management LLC and make the deposit.

Hey Erik, thank you for sharing. Your management company owns the lower chain LLCs? I’m switching over from the one llc I have now that owns all of my properties. Do you have any suggestions you wish you knew when starting this setup? Advice on things I should do or anything you can add that I should also do or look into.

0 Votes

I want someone who specializes in real estate taxes but it seems all accountants I talk to claim they can do real estate accounting as it is common. I own 13 rentals, do about 3 flips a year, and I am a real estate agent so pretty much everything tax-wise is in real estate.

Are the accountants correct?

Can most accountants do my taxes just fine?

How can I figure out which one might do better for my business?

Is there anything you can share that you wish you knew when choosing an accountant?

I have asked for recommendations from friends/investors I know personally and no one has been able to point me in the right direction so googling and calling is where I am..

3 Votes

With the help of an attorney and some responses here, I have come up with the game plan to have a business structure as follows:

Trust (Top ownership that owns the management company)

Management Company LLC (first actual company that owns all the LLCs below)

LLC 1 (rentals), LLC 2 (rentals), LLC 3 (rentals) LLC 4 (rentals) LLC 5 (Flips short holding) LLC 6 (Crypto mining) LLC 7 (Music production/band more of a hobby but def a business) LLC 8 (a future business I come up with)

Trust at the top that owns a management company. Below the management company, I will have multiple LLCs that hold rental properties. I will also have other businesses owned by this company. To my understanding, I can operate all of this out of one bank account since I am the sole owner of all of the LLCs and I have no partners. The attorney thinks I will be fine and my accountant said for tax purposes I do not have to provide any bank information to the IRS if I am the sole member as it all just goes to my personal return anyways.

As long as my accounting is solid do you think I will be fine if someone tries suing me in one of the LLCS down the chain? Safe from piercing the veil because of one bank account? I am open to having more than one bank account but would prefer to have as few as possible since I handle all the money throughout the business.

0 Votes

Quote from @Bill B.:

Yes the policy is a write off. The policy cost will depends on the properties. I have a 2 mil policy on a dozen properties worth about $4mil, 2 cheap cars, and a motorcycle. I was with USLI for the last 7-10 years. They were $1700 last year. This year they offered $1mil for $1200 as that was their max suddenly because 2 of my homes have pools. So I’m switching to Hudson this year. $2mil for $1250.

Thank you very much for that information. Everyone keeps telling me to get a policy and I believe it is a no-brainer at this point so I will be looking into this.

0 Votes

Toledo, Ohio

Quote from @Bill B.:

The llc’s will only protect you from losing all your properties if something happens at one property that they can find ZERO ways of blaming you. If you forget to have the snow removed then you’ll be sued along with the lLC’s and you’ll lose everything. If you have Joe Schmoe install a gas stove and it explodes, you’ll lose everything. And definitely if you’re in a car accident that’s your fault you will lose everything.

If the properties are only worth $800k, subtract from that all your loans, and that's the most you can lose in property. Get a $1 million umbrella, you save money and time, and you're probably over covered. Plus it stops you from losing your home and stuff, which the LLC's do not. Think about all the people who live in $800k primary homes that don't even do that. In fact if your loans are big enough you might not have a $1m net worth and only need $500k.

Don’t over complicate it.

Thank you for your time and insight. You wouldn't happen to know the rough prices of a 1mill policy, would you? This policy itself would also be a write off correct?

0 Votes

Toledo, Ohio

All Forum Posts by: Corey Duran

Corey Duran has started 14 posts and replied 38 times.

Post: Passing a Lead Safe Toledo Inspection

Post: Do you have an LLC for your Real Estate Agent business?

Post: Can I have multiple LLCs operating out of one bank account?

Post: Can I have multiple LLCs operating out of one bank account?

Post: Can I have multiple LLCs operating out of one bank account?

Post: Can I have multiple LLCs operating out of one bank account?

Post: Looking for a real estate accountant. What questions should I ask?

Post: Can I have multiple LLCs operating out of one bank account?

Post: How does this business structure sound?

Post: How does this business structure sound?