All Forum Posts by: Keith Meyer

Great idea to set up an updated forum for this topic. The rules and recommendations for this seem to be evolving on a pretty frequent basis. A year ago I'd never heard of a Delaware Statutory Trust or a Series LLC, and now I've been told that they're the "only way to go" on no less than four different podcasts within the past month.

One topic I think would be interesting to address is showing data demonstrating the average insurance coverage limits based on home value. When I converted my SFH from primary residence to rental, the process was surprisingly "turnkey" from what I recall. I'd relate it to purchasing auto insurance, where you're given kind of the default average coverage limits, then you just adjust up/down as desired (mostly guessing on what you should choose). Now that I'm more cognizant of the importance of asset protection, I wish my provider would do a more comprehensive job of explaining the importance of the various components of insurance. I think presenting summary data on what the national average is for the different types of coverage would be a good place to start.

@Ellis Hammond @Dan H. @Justin R.

FYI here's an invite to a newly formed local BP Meetup here in SD. I went last month and it was a great event. Enjoy interacting with you on the SD forums and hope to meet you in person at a local event (and hope to see you again soon, Ellis ;))

https://www.biggerpockets.com/forums/521/topics/594308-biggerpockets-san-diego-social

@Dan H. Those are very impressive numbers on your STR duplex! I have to think that with those income levels achievable, capitalism will figure out a way to satisfy this substantial market demand in San Diego. i.e. Pay up for the right kinds of permits, from which funds are allocated to improving roads, schools, homeless situation, etc.

There is too much of a market demand for STR for the city to artificially deprive this growing customer base. I have to think this is a political play which will reach a compromise within the next 1-2 years.

Again, look at those ROI numbers!!

I'm currently in a situation where I'm looking to connect an interested Investor with a commercial property Seller (who is actually a Wholesaler herself in this case). What's the easiest way for me to collect a finder's fee/referral fee for helping to connect these parties? 

I'd prefer to avoid putting the property under contract myself and doing an assignment, since there's already a Wholesaler involved. This seems like a transaction I hear about being executed on BP all of the time, but I haven't found a simple explanation or template for how to formally execute the process. I don't currently have any business entity/LLC, so that would probably eliminate the option of implementing a consulting contract and charging a fee for services. I live in Cali so I'd prefer to avoid filing for an LLC until I'm fairly certain the deal would make sense for both parties. The property is located outside of Cali.

Is there a simple Finder's Fee template which contains enough protection to handle these common transactions? What's a reasonable fee to collect on a ~$1.5 million transaction?

@Scott Smith

Thank you for the reach out. In fact your firm has one of the better articles I've found which visually diagrams the basics of setting up this structure. I'll take a listen to your podcast, and reach out to you if I have any follow up questions. 

In response to why this approach appears to make sense, in simple terms I've heard multiple respected real estate educators corroborate that this is the only real way to properly defend yourself from frivolous expensive lawsuits. Insurance typically doesn't cover legal fees.

Initially I thought this type of asset holding structure would be scalable and relatively easy to maintain, but not so sure at this point. I've heard this approach recommended on at least three different recent podcasts, there definitely seems to be some momentum behind it. Has anyone had recent experience in attempting to set this up? 

@Peter M.

Probably a good call on coughing up the money to do this right through a lawyer. I'm realizing that this is not at all an intuitive process, so experts will need to be involved.

I believe Land Trusts and child Series LLCs are free to file. I would only have to pay for the parent Series LLC as well as a Reg Agent and maybe a Trustee, I think.

If you have a good referral on a lawyer who's knowledgeable on this process I'd certainly appreciate it. Thanks!

BP Nation,

I'm looking for some help on how to properly configure a Series LLC for asset protection with Land Trusts for anonymity. My understanding is that this is the best modern method for holding a portfolio of investment properties. You get great protection, only have to pay to manage/file taxes for one LLC, etc. This topic is touched upon in other BP forum posts, but the logic seems to often go in circles, so I'd like to see if we can get a clean rundown of the process.

I live in California and currently own a rental SFH in New Mexico. I am actively working to add additional properties.

My summary understanding of the Series LLC / Land Trust process is:

1. Buy property in your name in order to get the best loan terms
2. Create a Series LLC
3. Create a Land Trust for each individual property. Deed property from your name to that Trust. Assign a "child" of the parent Series LLC as the beneficiary of that Trust. (Not sure if you would then list the Trust as the member of the LLC?)
4. Repeat for each property you add to your portfolio

My questions are the following:

• Is this process correct? Trying to clarify top-level and property-level ownership structure
• What is the most cost effective way to create and file the Trust and LLC docs? Is this something relatively straightforward which can be done through Rocketlawyer, etc.?
• What is the best way to handle assignment of a Trustee for the Trust, and a Registered Agent for the LLC? I'm looking for advice in terms of cost effectiveness as well as preservation of anonymity
• Living in California, with out of state rental properties, which state would it make sense to file the Series LLC and Trust in? Can I file the parent Series LLC in Delaware, then file the individual Trusts/child LLC's in their respective states?

This article shows a few diagrams which help to clarify the process. https://royallegalsolutions.com/series-llc-structure-anonymous-trusts

However I'm still a little stuck on how to sequence this process as well as where and how to file. I know this is a confusing issue many RE investors have been running in to lately, so hopefully we can clarify together on this forum.

Thank you all very much in advance for the assistance!

@Dan H. @Ben Biggs

Great insights and comments by both of you. Can't say I disagree with any of your points. 

One factor which could have a big impact on California real estate prices, but I don't hear discussed very often still, is the chronic drought conditions in this part of the country. After another bust of a winter for snow pack, this will likely remain an issue for the foreseeable future. Have you come across any analysis on how this could impact residential real estate in the years to come? It's interesting that the drought could both drives prices higher due to limiting the new supply of permitted homes, while also potentially lowering prices due to fear of a sustainable water supply for the existing population.