All Forum Posts by: Mike S.

@Juan T.

First of all having a relationship with your LLC will not pierce its veil and make you loose it's liability protection. You need to treat your LLC as a business. If you mix business with private affairs, then yes you will have problems.

Second, there a different ways to get money out of an LLC. It all depend on how you elected your LLC to be taxed.

Usually, if the LLC is disregarded or taxed as partnership, you can get distribution from the LLC to the member(s). You just need to record it in the LLC books.

I would highly suggest that you spend a few hours looking at the Clint Coons YouTube channel. You will find all your answers and more.

@Janis Buongermino

That is what I did for mine. Read all the fine print, look at the rate (be careful of promotional rate that applies first year only and all additional fee). Check if they would lend in your state and what LTV they accept (some will have a different rate based on the LTV). Also look at the repayment schedule (interest only, full amortization or a mix in between).

When you identified your preferred lender, apply.

No each lender uses his own appraiser, some use automated ones.

For your credit score, it is true that you would want to have all the hard pulls taken within the same period (I believe it was around 10 days). Credit score will aggregate all pulls within that period and it would take less a hit. But why would you want to apply to many places at the same time? You can get the rate and LTV of most of the lenders without pulling your credit. Choose the best one and then apply.

Is it for your primary residence or not?

If so Third federal has some of the best rate and higher LTV.

HELOC on investment properties is very difficult to find as COVID has shut down most of the usual lenders in that market.

Also, be aware that underwriting has been lengthen by the high number of applications. When it was taking a month to close on a HELOC a few years ago, I wouldn't be surprised that it would take at least three now.

If your LLC is disregarded, you tax return should look the same and the depreciation would continue as before.

Now if you are using an LLC taxed as a partnership, filing its own 1065, then yes you would have a K1. But if you are still the beneficiary of the LLC and you 'gave' the property as contribution to the capital of the LLC, I do believe that the LLC will inherit your tax basis and continue the same depreciation as if there was no change of title.

@Matt Jennissen

I had a HELOC from Wells Fargo. I transferred the property to a land trust with the intent to put the assignment later to an LLC to get the Garn st Germain protection on the due on sale clause.

Indeed WF didn’t call the loan due, but they froze my line of credit instead. I had to close it to be able to refi somewhere else. And WF took months to release the lien in violation of many regulations. I had to start suing them to make them move.

@John Conway

As mentioned above, Florida has unlimited homestead protection (up to 1/2 acres in urban area and more in the countryside).

So you would need to keep it under your name for asset protection.

For anonymity you can use a Florida land trust as title holding tool. That should not void your homestead protection nor trigger a reassessment.

One think you may consider for estate planning is to do a Lady Bird deed of your property to your living trust to avoid probate.

@Olive Eagle

I would use a C Corp for that instead of an S. If you want cash flow to you, an S Corp is preferred, but in the case of real estate I really don’t understand why you would transform passive income to active income.

On the other hand if you want to use the fringe benefit of c Corp, or get a w2 for loan purposes or create a solo 401k the C Corp has some advantages.

Last regarding your comment about having an LLC veil pierced because of a mortgage, that is only one of multiple factors that will be put forward in a lawsuit. If you treat your LLCs as separate entities with good business records and no commingling it will be difficult to pierce. Having your properties in separate LLC will provide way much higher asset protection that under your name when you have none at all. But if on the contrary you completely disregard your LLC everyday the judge will also disregard it.

To avoid make it looking like a sale, you should first transfer title to the Land Trust where you are still the initial beneficiary of the Land Trust. As there is no change of beneficiary, that should not create a problem nor a due on sale clause. Some counties will consider that as a change of ownership while some other, when showed that you are still the beneficiary won't.

In a second time, you will then assign quietly the beneficial ownership to the LLC. This assignment being a private non recorded document will be 'hidden'. I would however suggest to have it notarized to be able to prove the date of the assignment if challenged later on.

Don't forget to notify your insurances to reflect the change of title ownership of the properties.

@Sachin Maskey

If your LLC is in the same state than your bank you should have no problem using any banks.

If your bank is in another state, some banks will only accept LLC in states where they have branches.

You will have to look what kind of business account features you need. Some banks have good online banking with cheap wire transfer or ACH. Some have high fee or minimum balance amount. Some will offer credit card some won’t.

Also if you want ultimately to get financing, you may want to start relationship with a community bank.