All Forum Posts by: Mike Jones

@Mike S. @Calvin Thomas

Thanks guys. Its a little confusing. I looks at the IRS link shared by @Calvin Thomas and to my understanding, the IRS wants a real person's ssn, not an entity's ein . See below from the IRS site:

Responsible Parties

All EIN applications (mail, fax, electronic) must disclose the name and Taxpayer Identification Number (SSN, ITIN, or EIN) of the true principal officer, general partner, grantor, owner or trustor. This individual or entity, which the IRS will call the "responsible party," controls, manages, or directs the applicant entity and the disposition of its funds and assets. Unless the applicant is a government entity, the responsible party must be an individual (i.e., a natural person), not an entity. If there is more than one responsible party, the entity may list whichever party the entity wants the IRS to recognize as the responsible party.

According to the Instructions for the current revision of the application, the "responsible party" is defined as follows:

For entities with shares or interests traded on a public exchange, or which are registered with the Securities and Exchange Commission, "responsible party" is (a) the principal officer, if the business is a corporation, (b) a general partner, if a partnership, (c) the owner of an entity that is disregarded as separate from its owner (disregarded entities owned by a corporation enter the corporation's name and EIN), or (d) a grantor, owner, or trustor if a trust.

For all other entities, "responsible party" is the person who has a level of control over, or entitlement to, the funds or assets in the entity that, as a practical matter, enables the individual, directly or indirectly, to control, manage or direct the entity and the disposition of its funds and assets. The ability to fund the entity or the entitlement to the property of the entity alone, however, without any corresponding authority to control, manage, or direct the entity (such as in the case of a minor child beneficiary), does not cause the individual to be a responsible party.

Hello, I came across a 3 family for sale. building looks ok, but rent is below market. Trying to see if owner would finance. Attached is the Cap for review.

Please let me know if its worth it, or how to make it worth it. Price is at $208,000 

When you have a Property LLC owned by a single member Holding LLC, how do you obtain an EIN# for it? Do you apply for the EIN# using your SSN as the member and owner of the Holding LLC or you obtain it by using the Holding LLC EIN#?

And how do you open a bank account for the Property LLC when it is owned and managed by the member (Holding LLC)?

@Kulin Dakwala

Just curious

How do you sign documents for the llc that has the properties??

On the operating between the holding and the property llc are you listed as the manager or is it just holding llc member managed who owns 100%.

How did you open bank account for the property llc when you are not the owner nor manager??

@Kevin Breslin

I wouldn't believe and count too much on umbrella policy. They are full of holes and those insurance companies always find ways to deny claims. Usually a landlord policy would have a $300k to $500k liability coverage, plus the LLC, I believe should be enough.

I remember when I called in to inquire about umbrella policy and they told me they had to change my auto policy to be at $300k liability before they can sale me the umbrella at $400 a year but then it was gonna increase my auto policy by another $1000 a year. They force you to be at $300k on your policy because that is the what will pay out first before the umbrella kicks in. Usually that is enough and if not enough they will always try to find hole to deny the umbrella claim. Crooks

Just my 2 cents.

@Brandon Ropp

👌

@Brandon Ropp

Good work, the house looks good. You didn't say how much it cost you in Lender fees.

@Jaysen Medhurst

Thanks for your input. I don’t personally think it will be much of extra work, just different bank accounts to deal with. Never heard of having to travail to WY. I will have to look into that.

Having 3-4+ single MA entities seem to be more work tax wise then having all those entities under the WY umbrella entity. At tax time, all will flow back the the parent llc.

And I understand that I still have to personally guarantee the loan regardless of the structure. Just trying to understand why is that structure overkilled as some would say.

Having to invest without having your name out there is the beauty of it, at least to me. And WY is only $100 annually.

I am in the state of MA, and have 3 rent properties in my name and looking to move them into a LLC. Many talk about forming a WY Holding LLC owning a MA property LLC at 100% structure because of anonymity and charging order protection. They dont want their names on the property LLC etc. Is all that necessary? Specially for those like use who are just starting out, not millionaires and are in need of financing.

I will be single member owner.

I did speak to 4 local lawyers, and they all have different opinions. Some believe in it and want alot money to form the LLCs, some say if and when there will be a major lawsuit, lawyers will always find ways to get to you. This particular lawyer advised to just do a MA property LLC and get an umbrella policy that will cover the liability.

Did also speak to 2 small community banks about the structures, one didnt understand the holding and property llc structure and wasnt familiar with it, the other said it was ok but wasnt sure and will need to confirm that WY holding wont be a problem, because they only lend to just few states.

I want to hear how people are set up, and those who are setup with WY holding/property llc structure, did you have hard time getting financing for buy and hold properties? Will also be doing fix and flip, BRRR etc. Financing is big deal for me so I need to structure in a way that will not affect that.

I am also planning on adding partners to the equation when an opportunity knocks at my door. How would that play with either of the structures?

Thanks in advance for your input.

Stay safe and healthy out there.

@Jonathan Bombaci

I am also hunting for owner finance in Worcester area.