All Forum Posts by: Scott Smith

If your state doesn't charge franchise tax per Series (like CA) then a Series LLC gives you a one time cost with compartmentalization of each asset just as if you have one LLC per property. Series LLC's also allow for one tax return, and if it is a single member then it is a pass through entity for IRS which means that you report the income on your personal income tax and avoid the costly business tax return. I believe there is strong legal arguments to make about why a Series would hold up in any state, even a state which does not allow a Series to be established through the laws in their state particularly.

If anybody wants more particularized info on this feel free to PM me. 

Dollars to donuts the mortgage is going to have a due on sale clause. 

If you're buying 30% down, then you can likely have the property deeded directly into an LLC instead of doing the buy in your name and flip into LLC.

If you have enough equity in the property then you should be using an LLC with anonymity trusts to both protect the asset and hide your ownership of the company and your ownership of the asset.

Lawsuits happen because people think they can get something from you...if they think you don't own anything they don't file.

If the amount of money in equity is great enough you may want to hide that from public records. If you're interested in learning how let me know. 

@Jason V.

I address this issue in podcast #109. 

An LLC is litigation protection from suits not covered by insurance (any alleged intentional fraud, gross negligence, health code violation, etc.). It sounds to me like a cop out when attorney's say that an LLC won't be upheld, assuming that the client will find a way to screw it up. I worked hard with CPA's and business managers to design a structure and system that allow for easy management with proper legal oversight to get my clients the full LLC protection.

You want an LLC to hold the assets separate from yourself or the operations of the company. The best structure is a Series LLC with anonymity trusts so that you compartmentalize the assets if there is a litigation while hiding your ownership and the company ownership of the underlying asset. People don't sue you if they don't think you have anything worth taking, and if they do anyway then the Series limits their liability to a much smaller amount.

Seriously though, if you're investing $20+ into a single property (much less 10) why not pay a one time fee of a couple thousand to get the maximum protections, that costs nothing to scale, and without any year over year expenditures.

@Amaya T.

I address this issue in podcast #109. 

You want an LLC to hold the assets separate from yourself or the operations of the company. The best structure is a Series LLC with anonymity trusts so that you compartmentalize the assets if there is a litigation while hiding your ownership and the company ownership of the underlying asset. People don't sue you if they don't think you have anything worth taking, and if they do anyway then the Series limits their liability to a much smaller amount.

The Series structure I put in place is very simple for taxation purposes for your real estate, and otherwise as a shelter for non-performing assets (like your car). I have worked with Amanda Han (also a BP podcast contributor) to ensure the best and simplest tax structures. 

If you have any follow up questions for me feel free to shoot me an email. I'm collecting questions at the moment for future blogposts and Pcasts.

@Andy Albrecht I use the Series LLC with anonymity trusts for maximum protection while hiding my clients ownership of the company and the underlying asset per the title. I went to school at Hillsdale College so I know Grand Forks well, great micro brews...but I digress...he would need to file the LLC in a state that allows SLLC filings and then register it as a foreign LLC while knowing how to keep the anonymity in place...if you need any help navigating this let me know.

Brad, can you elaborate on the tax consequences? 

I address this issue in podcast #109. You can have all of the benefits of Trevor's viewpoint without assuming all of the risk.

An LLC is litigation protection from suits not covered by insurance (any alleged intentional fraud, gross negligence, health code violation, etc.)

You want an LLC to hold the assets separate from yourself or the operations of the company. The best structure is a Series LLC with anonymity trusts so that you compartmentalize the assets if there is a litigation while hiding your ownership and the company ownership of the underlying asset. People don't sue you if they don't think you have anything worth taking, and if they do anyway then the Series limits their liability to a much smaller amount.

Seriously though, if you're investing $20+ into a single property (much less 10) why not pay a one time fee of a couple thousand to get the maximum protections, that costs nothing to scale, and without any year over year expenditures.

@bradley clark, the notes would likely be owned by different lenders, but once the investor acquires them they are split into the individual series. Can you fill me in about the cross collateralization issue you see?

I can speak specifically to the Texas Series LLC and what my colleagues here believe. It is the opinion in Texas that you must treat a Series LLC and the Series underneath it as if they were separate LLC's. So, let's take the example that you had 10 LLC's that all hired a property management company. That property management company would hold all of the money that it collected in rents for the 10 LLC's, and it would track that money in its accounting software. Even though the money is in one account, it is not co-mingling in this instance because it is not treating the money of one company as indistinguishable from the money of another. This rationale guides the Texas opinion that one account for the Series LLC is sufficient if kept in the manner that you would for 10 individual LLC's.