Skip to content
×
Pro Members Get
Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
ANNUAL Save 16%
$32.50 /mo
$390 billed annualy
MONTHLY
$39 /mo
billed monthly
7 day free trial. Cancel anytime

Let's keep in touch

Subscribe to our newsletter for timely insights and actionable tips on your real estate journey.

By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions
×
Try Pro Features for Free
Start your 7 day free trial. Pick markets, find deals, analyze and manage properties.
Followed Discussions Followed Categories Followed People Followed Locations
All Forum Categories
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

All Forum Posts by: Mitchell Zoll

Mitchell Zoll has started 2 posts and replied 110 times.

Post: Asset Protection: Two Company Structure Questions

Mitchell ZollPosted
  • Attorney
  • Austin, TX
  • Posts 112
  • Votes 78
Quote from @Mark S.:

@V.G Jason Does anyone in this thread 1) know any property owner who has been successfully sued by a tenant or guest, and 2) had excellent insurance coverage that did not cover the damages?


I have as defense counsel. The cases usually involve multiple defendants so I would have only been representing one of many defendants. The cases typically involve death or significant bodily injury. The only advice I can give is to check your structure with your lawyer and make sure they have experience actually defending these cases. Use their real world experience to understand how depositions and discovery will test every one of the layers in a real court setting. 

Post: Steps to buying out a business partner

Mitchell ZollPosted
  • Attorney
  • Austin, TX
  • Posts 112
  • Votes 78

Start with your Operating Agreement (Company Agreement if you are in Texas).  That should have provisions for how one party will buy the interests of another.  One component you will likely need to have will be a valuation of the company.  If your books and assets lists are up to date this should be pretty easy for your CPA to provide.  Look to your annual/quarterly meeting minutes to assess any prior discussions or decision about assets or their valuations and your business plans. You will want to make sure you document the transfer, update any vendors/contracts to let them know the new owner is no longer part of the company, and update state records to show the new ownership. 

Post: Asset Protection: Two Company Structure Questions

Mitchell ZollPosted
  • Attorney
  • Austin, TX
  • Posts 112
  • Votes 78
Quote from @V.G Jason:
Quote from @Mitchell Zoll:

Make sure to check the statutes of the states where you are going to operate. Some states have liability on the "owner" even if they use a "manager."  In this case, having multiple entities might just create two defendants (and two pools of insurance). 


 Understood. Off the top of your head, do you know which states these are?

It has been at issue in every state where I have litigated premises liability claims. Talk to an attorney who has actually litigated a premises liability case in the state where you are investing and use that to learn the rules. Cases are public record so they should be able to tell you the cases the they have handled and the rulings they are using to give you advice.

Post: Asset Protection: Two Company Structure Questions

Mitchell ZollPosted
  • Attorney
  • Austin, TX
  • Posts 112
  • Votes 78

Make sure to check the statutes of the states where you are going to operate. Some states have liability on the "owner" even if they use a "manager."  In this case, having multiple entities might just create two defendants (and two pools of insurance). 

Quote from @Chris Matos:
Quote from @Mitchell Zoll:

Hey @Chris Matos


Hi Mitchell, yes I chose series LLC based off my goals and attorney's fees. I working for 20 units within 2 years (duplexes, tris/quads) here in DFW and would like total privacy/anonymity.

WY holding cost me $1,000 flat fee.

Option 1: WY holding LLC that owns TX LLC for each property

- Because I want around 20 units which if all duplexes would be 10 actual properties. The attorney I went with charges a flat fee for TX LLC of ~$800. If I obtained all the property this would cost a little over $7,000 in just TX entities over time.

Option 2: WY holding LLC that owns TX Series LLC each cell then owns 1 property

- The series flat fee was $3,000 and each cell would be around $250. Using same property amount above 10 properties which would be 10 cells would cost me around $5,600 over time. 

Option 3: WY holding LLC that owns 1 TX LLC which would own all property (about 20 units)

- This was definitely the cheapest option and works for plenty of people. One TX LLC $800. However, for me I am not remotely comfortable hanging all my property on a blanket insurance policy. It seems insurance makes money by not paying out which is great for them but not a risk I want to take. I went into this "assume the worst, hope for the best." So if I plan on being sued I do not want insurance as my only back up.

Option 4: TX Trust owns TX LLC (Could be wrong but I believe this was the overall structure)

- I was least familiar with this options because of the trust. The Trust ranged from $1,000 - $5,000 and "could quickly approach $5K" according to my attorney. Again assuming the worst, $5K plus a TX LLC $800 total around $5,800. Since a trust is an entity I could always add in the future I elected to hold off for now.

All in all typical LLC vs Series I was not worried about banks because they are out there and it just takes some phone calls to find them, nothing crazy. I went with the Series LLC option because it was slightly cheaper than option 1 and I would actually like the experience of working a Series LLC. Additionally I called several title companies and lenders (private/hard$) all of which had no issues with Series. Hope this helps some folks out there!

Sounds like you have done a lot of thinking on the cost structure and you are working with an attorney to help you analyze the options. Remember that a new LLC filing fee is $300 and a series registration is also $300. So those should actually be a push.

But you are talking about this in concerns for lawsuits. Make sure you are ready to defend suits in Wyoming if the claim warrants it (your llc members are Wyoming- so no complaint you are not “from” Wyoming, right?). You aren’t anonymous-You’ll sign checks, contracts, etc and discovery will get the members of an entity if need be. Also make sure to consider the questions in my post above. You are smart to consider the costs up front… but ask your lawyer about how it plays out in litigation. What can you expect from a discovery request based on 101.602(b)… how’s your record keeping?

You have a lawyer and so I’m sure you are getting these questions answered. Just making sure others know these are important considerations. Good luck with the investing!

Post: LLC Set Up (Holding + Subsidiaries)

Mitchell ZollPosted
  • Attorney
  • Austin, TX
  • Posts 112
  • Votes 78

Hey Gloria - I'm an attorney in Austin and I am happy to help if I can. I don't have a salesperson so you always "talk with the lawyer." Real estate investors often want to set up an LLC to "protect their assets," but the lawyers and the investors never discuss what that actually means. Sometimes an LLC is the right answer, but not always. I have litigated/defended premises liability cases (death/injury at rental property) in multiple states, and I use this experience to help my clients understand what really happens when something goes wrong. There are many lawyers on Bigger Pockets and I am sure we can all address your questions. But before you get into a complex web of LLCs, Series LLCs, and entities in states where you have no connection, please ask the lawyer (not the salesperson) for their personal experience litigating the cases (that's why you are setting this up, right?). What were the claims? Who were the defendants? What was the discovery like and what rulings did the court make on any discovery battles. THEN ask how the entity structure they are recommending worked in those situations or would have worked... and why. 

Hey @Chris Matos

Post: LLC setup and Tax Planning

Mitchell ZollPosted
  • Attorney
  • Austin, TX
  • Posts 112
  • Votes 78

Hello Julie - I am an attorney in NW Austin and happy to discuss the legal side of the LLCs with you! 

Post: TX Attorney referral to draft LLC operating agreement

Mitchell ZollPosted
  • Attorney
  • Austin, TX
  • Posts 112
  • Votes 78

Yan - I represent small and midsize businesses in entity formation as well as buying and selling of business entities and their assets. I am in Austin, Texas if the area matters.  Happy to help if I can. My firm is Zoll Firm, PLLC.  Please feel free to reach out if you don't already have help. 

Post: Which would be best; LLC or S Corporation

Mitchell ZollPosted
  • Attorney
  • Austin, TX
  • Posts 112
  • Votes 78

I think the real lesson is that lawyers have differing views on entities and structures, and that is why it is best for you, the investors and owners, to talk to YOUR personal lawyer to get guidance based on your investment profile and experience (and I bet your lawyer will likely have a THIRD opinion). This is why forms off the internet or DIY services aren't recommended (by lawyers of course). There are many questions to drill down, and there is a lot of learning that goes on before you simply "check a box". I understand the desire to save money and go it alone. That isn't wrong if you already know what you are doing. But if you are just starting out (or didn't take the education step from the start), call a lawyer. Ask them about their experience with forming entities. Ask them about their experience buying/selling entities and litigating disputes (that's what you are protecting against, right?). Then call another lawyer and ask them the same questions. Then, choose the lawyer that is the right fit for you (no lawyer is a good fit for every client) and use them to help you learn.

1 2 3 4 5 6 7 8 9 10 11