All Forum Posts by: Mike S.

@Derrick E.

When you have multiple properties in multiple LLC you can create a management Corp that will be the one signing lease and collecting rents for all your properties. Once a year you can then transfer some money back to each single LLC. The management Corp can keep the reserve account and pay all the taxes and expenses.

Also to simplify taxes and improve the asset protection and anonymity, I would have all these single member disregarded LLCs be owned by one WY holding LLC.

@Scott Kays

I agree with @Costin I. However be aware that some lenders won't deal with land trust the same way they won't deal with LLC.

A few will accept the land trust but not an LLC.

Over the counter tax certificates are either certificates that were not sold during the June's auction or homestead property certificates that were below the statutory minimum $250 at time of auction and reached that threshold due to late interest fee later on.

In the first case you will have to figure out while the certificate did not sell during the auction. Florida tax certificate market is very competitive and many firms are buying in bulk at auction time. It is very rare to see one certificate staying over the counter. Either the auction has been canceled (buyer not paying, or other issue) or it was not bought on purpose as there is some underlying factors that make it not worthy to purchase.

In the second case you may find good deals. I have myself bought plenty of those. But they are cheap (around $250) and maybe not worth your time as the research time is probably the same than for a more expensive one.

Again for tax certificates in Florida you don't need title search. You are not buying the property, you are just getting interest on the unpaid taxes by buying a kind of first position lien, ahead of money lenders.

The tax certificate will show on its description the property PIN it is related to. That number either on the county property appraiser or county tax collector will give you the full legal description of the property. From these two websites you will also be able to determine the total past tax due, the "appraised" value and if other tax certificates have been issued or not.

For buying a real estate property at a Florida county auction (ie tax deed auction), you will need to make due diligence researching all the government liens on the property (code violations etc.) as these will not be extinguished by the tax deed. The bank liens however will.

In Florida you can buy tax certificates.

These tax certificates don’t give you any rights to the property and your are not even allowed by law to contact the owner until the two years hold redemption period is over.

When you buy a tax certificate, you are expecting the owner will eventually pay the back taxes. You will then be paid back the cost of your certificate plus the interest owned that could be up to 18% per year with a minimum payment of 5% of the total.

If the owner does not pay back the taxes after 2 years. You have up to 7 years to force the property to be sold at auction. You will have then to pay back all the other back taxes and certificates plus some fee. The property will then go to public auction and be sold to the highest bidder. The first bid will be the total amount of money that you paid. If some one else bid and win the auction, you will get your money back plus interest. If no one bids, then the property will be yours.

So basically, tax certificates in Florida are not a way to buy property. Owning a tax certificate does not give you any advantage at the public auction.

Tax certificates are just an investment that can give you a return of up to 18% per year with sometime more when you get paid back the 5% minimum interest a few days after buying the certificate.

When you buy a certificate you have to be cautious of the value of the property, its use, the amount of total tax delinquency vs the total cost of the property, and the likelihood that the property can be sold at auction if needed. Be warned about useless piece of land 1 feet wide by 200 feet long in between roadways, prior single family home that don’t exist anymore but are now vacant land, properties where the amount of back taxes is higher than the appraised value of the property, ...

LLC don't exist for the IRS. They are state structures.

An LLC can be taxed as a partnership, a C Corp, an S Corp or totally disregarded.

Most LLC structured for buy and hold real estate are usually either taxed as partnership or disregarded entity. They are as such tax neutral for its member and don't pay taxes directly as they pass the tax to the member(s).

They are used for asset protection mainly. The problems created by these LLC are the cost to maintain the entity (state fee, registered agent), maybe a 1065 informational tax return CPA preparation cost for multi member LLC taxed as partnership (but you can also do it yourself), the higher cost of credit (lending rates for LLC is usually higher than for individuals, and lenders are more difficult to find), and the cost of using a lawyer to represent your entity in court when needed.

On the other end, they will insulate your assets in case of lawsuit from either inside liability or outside liability attacks.

Only you can decide if the cost of creating, maintaining and operating such entity is worth its protection benefit for you.

In my personal case I made the decision to use multiple entities to hold each of my real estate asset, using also other tools like land trust, holding LLC and also a management c Corp for some of its tax advantage and benefits.

Dividend is probably the worst way to get your money out in a real estate LLC.

First of all LLC is a state entity that does not exist for the IRS. An LLC can be taxed as a C-Corp, as an S-Corp, as a partnership or even be totally disregarded.

If you are investing by yourself and without other partner, the more often used structure would be a single member LLC. Unless elected otherwise, it would be a disregarded entity and all the income would flow through your tax return like it does without an LLC. Using an LLC in real estate has usually no tax benefit. It is used for asset protection. And it is not as easy as going online and create a new LLC. You have to understand your State charging order protection if any (some don't have it as sole remedy, other will only provide it for multi members LLC). I would strongly suggest that you educate yourself on the subject as there are many excellent threads on the subject already on this forum.

Also I would encourage that you learn about the negative aspects of using an LLC too (cost, lending limitations and rate, use of a lawyer to represent it in court, ...). When you will understand all the pro and con you will have all the elements to decide if using an LLC is the proper answer to your specific situation.

@Helen De la rosa

I have been using sunwest trust for a checkbook LLC sdira.

They are fairly priced and have been very reactive so far.

In my view LLC are a necessity in real estate for asset protection. However, they create some additional burden and cost. Fort instance, your lender may not give you the same loan condition it you are taking title of the property into an LLC. Some may even refuse to even give you a loan in that condition. There are some strategies to mitigate it, but they also add complexity and cost.

Liability insurance is not a replacement for proper asset protection. Both are needed.

Now, based on your specific situation, you may or may not decide to use asset protection strategies. Like everything else in life, you need to make an informed decision taking into account all the factors. Is the risk worth the additional cost? Only you can answer that. In my case, I decided that asset protection was a must.

Whatever decision you will make, you have however a duty to get educated on it to understand your options.

DBA does not offer ANY protection. If you have no assets, then you have nothing to lose. However, if you have some, not getting them insulated from each other is dangerous as you can loose all of them at once.

Yes LLC veil can be pierced if you are not using it properly. The same can be said about insurance, if you start a fire on purpose in your house, your fire insurance won't cover you. But if you are cautious and respect their mode of operation, LLC offer very strong protection from either inside liability (all states are almost the same) and from outside liability (each state is different and there is also differences between single and multi members LLC. Some states have weak protection while others are very strong).