All Forum Posts by: Steve Hall

According to World Wife Land Transfer, a spouse must be on title. This attorney says differently. Time to get a Florida attorney.

If this is an investment property, you are doing this all wrong anyway. A sophisticated investor would NEVER buy an investment property in their personal name, they would purchase it in an LLC. You're playing with fire.

@Ryan Luby You are asking great questions with serious legal, as well as tax, ramifications. I can tell from the questions you asked that you do not have an attorney or a CPA. It's time to get those on your team. This is the wrong place to get legal or tax advice.

@Ashish Acharya is likely correct that a "personally guaranteed loan related to property in an LLC does not pierce a corporate veil", but based on the way you are doing things, my guess is that your other actions have indeed pierced your corporate veil. Once that happens, you might as well not even have an LLC - it's worthless (as far as liability or charging order protection goes.)

One of the most important functions of an LLC is to protect you personally from it's liability, and it from your personal liability (and the liability of your partner). There are rules to follow to ensure this happens.

An LLC is a business and must be treated as a business, not an "insurance policy". It needs it's own business bank account and business credit card. It must have a place of business, a web site, a phone number, etc. It must have capital reserves. Members must have meetings and take minutes. All loans should be in the name of the LLC (regardless of whether or not you or your partner are guarantors.) Yes you will pay more for a commercial loan, but this is a business!

The problem is most people think exactly like @Ryan Luby: "this seems like one of those keep pushing and figure it out along the way type scenarios." What they don't understand is that the LLC's liability protection is never put to the test until you are sued! Do you really want to take a chance in 10 years when you have 50 properties to lose?

Sophisticated and accredited investors use Fannie Mae and Freddie Mac Small Balance loans, which are non-recourse. I would NEVER personally sign as a guarantor on any property that is owned in an LLC. If I don't want a creditor coming after my personal assets, why would I allow the bank to do so?

@Clifford Gray When you use the phrase "are there legal ramifications" in a post, that is BIG CLUE that you need an attorney.

I agree with @Saul L. You should always have 6 months (or ideally 1 year) of cash reserves. If your plan involves taking you below that threshold, then it is not sound, and should not even be considered.

As an example to others considering partnerships: this is a classic example of the problem with poorly structured partnerships. @Shoshana Shulman has had an investor partner for 7 years and now the partner wants out. If this partners sells their share to someone else, she will then have a partner that she did not choose or approve of. This could turn into a nightmare.

Wow! Lot's of misinformation here. Let me try to explain why you MUST have an LLC.

If you are a sole-proprietor (No LLC) and a tenant gets killed because of a faulty oven in your SFH rental, their estate/heirs will sue you for $10 million or more! They will take your rental, they will take all the money in your personal accounts, savings accounts, IRA's and 401k. They will take your vehicles, and then, depending on your state's homestead laws, they can take your personal residence. They will get a judgment against you for the rest. They will use Writ of Attachments and garnish your wages and you will work the rest of your life to pay them.

It the property were owned by an LLC, they could only sue the LLC and most likely all they could take is your SFH rental. (Assuming you do everything correctly and do not allow the corporate veil to be pierced.)

Here is another scenario where the LLC will help protect you:

If you are a sole-proprietor (no LLC) and a UPS driver slips on the wet lawn of your personal residence, hits his head on a rock and dies, his estate/heirs will sue you for $10 million or more! They will take all the money in your personal accounts, savings accounts, IRA's and 401k. They will take your vehicles, and then, depending on your state's homestead laws, they can take your personal residence. You know the rest. What you may have noticed is that they cannot take your SFH rental because the LLC owns it!

If the property were owned by an LLC, they could only sue you personally for your liability and most likely, all they could take is your personal stuff. (Still bad, but imagine if you had 50 rentals like @Arlan Potter. He would have lost all 50 of his properties!).

Sure insurance is great, but what if your policy was only $2 million max and you're sued for 10 million?

I recommend that you put your personal residence and other personal assets in trusts and LLCs as well. The reason you might use a Wyoming LLC or Nevada LLC to own an LLC in your own state is for anonymity. If someone wants to sue you, they'll never find everything you own.

@Stanley Bronstein posted that you are required to register your out-of-state LLC. This is NOT true for all states. Be sure to check with your state to see if this applies to you, and your particular situation.

I went down a long road with Sutton Law / Corporate Direct trying to structure my businesses. PM me if you want the scoop. Anyway, at the end of the long road was a PDF document (the Articles of Organization) for which I was charged $695, plus $102 filing fee (for WY), and a $50 EIN fee. (They give you one year free Registered Agent (RA) service and then charge you $125 per year after that.) 

Two scams here: First there is the $50 EIN fee. I found out that you can get an EIN for free from the IRS in 5 minutes!  The second scam is the $695 for the PDF. It's just a Word doc that they fill in the blanks, click Export to PDF, and then email to you. When I found that out, I asked for the Word Doc file. Lisa claimed: "it's not our policy to provide the doc file but I will ask my manager".  Then Stephanie emailed me and said that Garrett told her to refund my money and say "sorry we could not help you." 

Wyoming Register Agents will set you up with an LLC for $199 and then only charge you $99 per year for registered agent service.

Wyoming Agents only charges a $150 setup fee... or even $125 if you file yourself! Wyoming Agents only charges $25 per year for registered agent service. And I found out you can switch RA's to Wyoming Agents any time, for just $25 per year.

I too was fooled by the "Rich Dad Advisors" badge, but boy was the air let out of my tires. Now I will avoid all of the Rich Dad Advisors.

Before anyone responds to @Lea Mitchell, you may want to read her post from last month. (It helped me understand the situation better.)

I would tell the tenant that you are planning to sell the home and ask them if they want to buy it. If they say no, then tell them they have 30 days to move out. Once they move out, put it on the market.

No investor will buy it with the tenant in place if you are losing $200 a month, and if you try to show it while the tenant still lives there, they could tell the prospective buyers that it is a high crime area, that they get migraines after spending more than 4 hours in the house, or that there is mold in the attic.

Also, keep in mind that if you have a current lease agreement in place, you will need to honor it.

Welcome to BP... The Section 121 exclusion is clear that you must have owned AND used your home for 2 out of the last 5 years.

First thing you did wrong is post on here that you did not live in the home until May 31, 2017. Was there any public record of that fact until now? If you have a utility bill in your name for April 2017, you could have claimed that you "owned and used" the home since April 10, 2017. Now you cannot.

Second thing you did wrong is post on here that you are moving out on April 22, 2019.

So @Dave Engelberg you are now moving to Florida on June 3, 2019, right? You are just taking a vacation or two in April and May. Or perhaps you are going to move ahead of your spouse to look for a job, but she is going to stay in the home in NY to prepare the house for the sale.

@Jared Carpenter Yes Jared, that is what I was saying. Are you questioning my math, or the fact that you don't think 40+ units exist for less than $2m?

Here's 3 to get you started:

https://www.loopnet.com/Listing/1707-N-Ashley-St-Valdosta-GA/15146171/

https://www.loopnet.com/Listing/2516-Perry-Park-Ave-Perry-IA/15619635/

https://www.loopnet.com/Listing/900-Ross-St-Vernon-TX/15517298/

Welcome to BP @William Kyle. There are multiple legal issues as well as tax issues with structuring something like this. Discuss this with both your RE attorney and your CPA. If you don't have one, or both, then that is a prerequisite to even THINKING about a partnership.