All Forum Posts by: Jeff V.

You might try checking your county tax assessor Web site to see who owns the property.  Ours are usually updated quickly. 

Jeff V

@Eric Waterman

Yes it can be done.

Several ways to accomplish this:

First way is to get the HELOC in your personal name using your home equity as collateral. Take a draw from the HELOC and deposit in your personal account. Then write a check from your personal account to your LLC's account as a MEMBER CONTRIBUTION. This will keep the funds accounted for properly. However with this method the payments and interest will be made from your personal funds being its really a personal loan.

Second way

Obtain a HELOC within your LLC using your PERSONAL home equity as the collateral. Then when you take the draws you just put the funds directly into your LLC account. You then pay the payments and interest from the LLC funds. It's much cleaner this way.

Either way, just know your personal home is at risk every time that you use the funds to do a flip ect.  So be sure and minimize your risk as much as possible and make sure you have plenty of reserves to cover yourself.

Hopefully this helps point you in the right direction.

Oh and either way you will have to guarantee the debt personally anyways regardless of which way you structure it.

Jeff V

Jeff,

I would suggest looking into Jeff Brown's site he has alot of information on using EIUL policies as a retirement vehicle which could also be used in private lending.  He also has a blog on here.

Hope this helps get you going in the right direction.

Jeff V

First off let me say I'm no CPA but I do the book keeping for the partnership. 

We use the offline version of quickbooks so we can have multiple quickbooks files for each llc. QBO doesn't allow multiple files I don't believe or there was additional expense.

I would suggest having no more than 3 to 5 properties or 250k in equity per llc just to minimize liability. 

You should have a separate  checking account per llc not per property.   You can separate each property in quickbooks by using a different class per property.  This allows you to run p&l reports per class to see which properties are doing the best.

Like I said, I do the book keeping and have the CPA issue 1099s, K1's, provide depreciation information, file returns and annual reports.

I do not have anywhere near the number of llc's that you have.  You are approaching the level that I would be looking into hiring an accountant to manage that many books.

Hope this helps.

Jeff V

Miles,

Nicole gave a good run down of the accounts you should have.

I will add the whole separate accounts that you hear people discussing are referring to having a separate account other than your personal account.  Not necessarily a separate account per property. 

However at some point you will accumulate enough properties say 500k worth where it will be in your best interest to create another llc to limit the liability on that 500k to only those properties while you continue to build your next 500k bucket of properties. In that scenario you will want to have another set of accounts for the second LLC.

In regards to the S-Corp it's a pass through entity as well with an extra feature that it pays dividends to shareholders.  This is beneficial to those who are building an ACTIVE business such as contractors where you draw a salary from the business like a job and then pay profits out in dividends.  The key is with dividends you get around the self employment tax. Again this is for active businesses where you draw a salary.  In my opinion there isn't much benefit from S Corp in a passive investment business such as buy and hold rentals.

Again just my 2 cents, hope it helps.

Jeff V

Oh and talk to your CPA for more info and tax advice.  Opinions listed above are just that based on my experience and what I have learned.

IF privacy is what your looking for you can use a land trust to hold the property with the LLC being the beneficiary. The trust will provide privacy while the LLC provides liability protection.

This would require a lawyer to be involved, so if your interested in that contact your lawyer.

Jeff V

Miles,

I have a partnership and we started off with an LLC because of that partnership.

If it were not for that partnership, here is what I would have done different.

Take advantage of the great financing available as an investor in a sole proprietorship until you hit your limit and are required to get commercial financing. Just keep your insurance levels up with an umbrella policy. At that point, it's worth investing in an LLC for the extra liability protection they provide... Let me dispel a myth, they do not provide ANY privacy... you can look up on the secretary of state website and look up the owners of any LLC, so don't expect any privacy.

The benefit you will gain from the LLC is Liability protection, hence the name "Limited Liability Company". Basically each LLC is a new bucket of liability. For Example if you have 3 properties in an LLC and one gets sued for slip and fall or something the LLC will be who is sued and not you personally. This means they will only be able to get at the 3 properties and cash in the LLC. They will not be able to take your personal assets such as your home without piercing the corporate veil or some fancy tactic.

Also, not sure about TX, but in Louisiana you can go to the secretary of state website and fill out an online form and launch your LLC in about 10 mins for $75 and then you pay an annual fee and file an annual report to keep it legal. An LLC is a pass through entity, meaning that your P&L flows through to your personal tax return. There is no difference in regards to taxes by operating in an LLC vs sole proprietorship. Both P&L are reported on your personal tax return so a separate filings are not required. You only send an annual report for the LLC. I wouldn't pay a lawyer to setup LLC unless you have a complicated partnership and need an operating agreement drafted... even then I would setup the LLC and have the agreement drafted separately by an attorney.

Summary:

If you have a partnership, go with the LLC... otherwise I would exhaust your good financing opportunities as sole proprietor and then open the LLC for additional deals. Don't worry about transferring all the property accumulated to the LLC, just put new acquisitions in the LLC. Why muddy the water by transferring into the LLC, you will still be personally liable for the mortgage and protected by insurance so not much of a benefit to transfer after the fact.

Just my 2 cents.

Jeff V

2 Good companies for collecting payments are Cozy and Smart Move they also do tenant screening.  Cozy has phone apps as well that auto remind the tenants to pay OR just auto pays but the tenant selects which method they prefer.

I prefer Smart Move for their tenant screening, but Cozy for their payment system.

Jeff V

I would check into performing notes and maybe even buying them within a solo-401k.

From what I can tell once you are past the accumulation phase of investing this one of the best strategies for exiting the rental game and doing pure investments backed by real estate.

Jeff V

There is a way to apply for title through the DMV for a vehicle that was abandoned on your property.  We had to do it once to get title to a mobile home left on a lot.

I don't remember the details but the DMV could walk you through the process.

Or you could have it towed if you just want to get rid of it... I would think it's no different than a shop owner having a vehicle towed that blocks a loading dock or improperly parked on their property.

Jeff V