All Forum Posts by: Jennifer Gligoric

Transferring to an LLC can and has triggered the Due on Sale Clause, the remedy for this is to transfer the property back. Mike S is correct that it's typically an insurance inquiry that will trigger this.

Depending on your structure, you can still have the benefit of an LLC and a Trust if you decide to use a Series LLC or DST. If you transferring solely for estate planning circumstances, then there are a variety of trusts you can use for this such as a QPRT for California residents if the property also happens to be your first or second home.

A lot of how you structure your business depends on geography, type of investment property and what you are looking to accomplish in your business plan for both the short and long term.  There are many different types of entities so it's important that you speak with someone with real estate investment experience before you pick one that can give you the pros and cons of each for your resident state, investment property state and business plan.

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No they don't, only 18 states and territories do; however, that doesn't mean you have to incorporate in the state.  For many investors, it actually behooves them to incorporate in other states which is why Texas, NV and WY are such popular options for real estate investors. 

@Costin I. well anonymity in and of itself is a facet of asset protection, the more anonymous you can make your structure the harder it is for vexatious litigants to use public systems to see if you are worth crashing their car into or falling on your sidewalk or asking for a private viewing of a property & then have something occur, etc. However, you're correct in that to be truly protected you need to add that to a powerful entity structure such as a Series LLC (I don't personally recommend stacking LLC's as they are a house of cards structure, expensive and clumsy to deal with except in certain situations.) or Delaware Statutory Trust.

The main difference between a DST & LLC from the mile-high view for investors is that California, Massachusetts & Delaware investors are the prime candidates for the DST. Other factors such as where you live, where your properties are located and other business ins and outs do come into play and that is not a hard & fast rule but a good general one to follow.

In terms of structure they act in a similar fashion. The LLC just on it's own will need separate EIN's, accounts and can be quite costly to scale. The Series & DST, depending on which one matches your particular situation, might be a bit more on onset - but much easier to scale.

Currently Delaware is starting to waiver in terms of corporate veil piercing for certain divorce proceedings and this is developing so I'm personally keeping on eye on it - though for most investors it won't make that big of a difference, for those depending on their personal situation, it might so it bears watching by those in the legal/real estate investing community who are familiar with these asset protection strategies.

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You know, as funny as that sounds, it's not a silly question.  If you're a real estate investor and you need a car to do your job and you will use it for work, with the right structure and if you have a good business plan and then get funding pre-revenue you can get the car - but then you will, of course, have to make the money to pay for it.  

@Matt Mainini  Good luck and I think everyone will understand your strong motivation in enacting due diligence when it comes to ensuring your investments have the best chance of success.  We've all had or witnessed tenant horror stories but I'd caution against letting that experience, mismanaged as it was, color your actions now in a way that is stressful or worse might inadvertently open you up to a breach of contract or breach of quiet enjoyment suit.  At $10k a person (if there is more than one person on the lease) it can add up.   In San Francisco & Oakland, breach of quiet enjoyment in bad faith if proven can triple damages.

Good luck & maybe do an inspection every 6 months and call it Spring & Fall seasonal checkups and write those into the lease and get them to initial, sign off on it - and give the right written notice would be a compromise until you get more comfortable with your ability to vet and place good tenants.  

I agree with @Amit M. and want to add some thoughts.  

@Matt Mainini  you state that you had only a verbal agreement ( "We verbally agreed before renting that I would inspect quarterly, so I asked that we hold off on that decision" (she had stated not to come back until the lease was up).

A verbal agreement is not a written one.  A verbal agreement that allows you to deviate from standard business practices (quarterly, rather than a move-in and annual inspection make your request a deviation) is not good business practice.  My guess is your position will be hard to defend with this type of tenant reaction combined with no written documentation of their consent.  

For the record, here is the actual CA statute and (Cal. Civ. Code §§ 1950.5, 1954)  https://leginfo.legislature.ca...

I'd also like to add that the moment she told you to leave, if I'm not mistaken, that she had to right to do so as the "person with lawful possession" of the property. You might own the home but typically those that are on the lease have "lawful possession".  She might have agreed to your request in writing (it was in writing wasn't it?  In California you have to request entry in writing with some exceptions - this is not one of them) but once there she has the right to tell you to leave.

An experienced property manager in the state might be the best best for you.  It's the smartest money you can spend and my guess is that the cost of frustration, emotion and upset that this one interaction has caused you would be more than worth having someone else do this for the fee.

*caveat - I am not an attorney and this is not legal advice though I do know some great attorneys*

@Luke Millet It really depends on what you are doing, but I don't recommend just building a house-of-cards single LLC for every house if you don't have to when you have the more powerful and easier to manage Series structure that you can manage with a minimal amount of bank accounts under a single EIN, just making sure that your accounting is separated and classed so it shows that there is no comingling.