All Forum Posts by: Steven Cosner

Send me a direct message if you want to discuss further.  I'm sure the folks on the thread don't want to be bother by us going back and forth. I think you are focusing on a different aspect of what I am trying to convey.  I don't think you are trying to be a jerk.  I know the it can get a bit confusing.  It was confusing to be also.  But I now understand very clearly how it works.  I am not an attorney either but I have been studying this intensly for many months.  

You're comparing apples and oranges.

Good to meet you.  My wife and I have been clients for about a year.  We just attended a 4-day live event with them in Orlando last week.  They are tremendous individuals.  The information we got from that event was extremely eye-opening.  We can only provide the guidance in this forum.  If nobody takes it, then they will just have to keep their fingers crossed that the worst doesn't come to them.  Running a business is costly.  Much of it due to the protections you need.  If someone is going to run a business where they try to cut corners than they have no one to blame but themselves if someone comes and takes it.  Best of luck to you in your investing.  I am sure we will be in touch in the future.

@Michael Baum There seems to be some misunderstanding of what we (@Sarah Kensinger) are saying. Nobody and no entity are immune from a lawsuit. Yes, the LLC can be sued. What we are saying is that the LLC isolates the business from you personally. There is much more to it than what can be conveyed in a text forum. But think of it this way. An STR is a business. Just like a McDonalds. If you are the franchisee that owns a McDonalds and a little old lady spills hot coffee on herself and sues, she is suing the McDonalds. Not the owner of the McDonalds. Even if the McDonalds is negligent. The lawsuit is going to attack the business and not the owner personally. If the owner does not have the entities in place to separate the BUSINESS from his PERSONAL assets, or if he does not run the business properly and allows the old lady to "pierce the corporate veil" then his PERSONAL assets are just as accessible in the lawsuit. Therefore, having the proper entity DOES provide the asset protection she needs.  The insurance is there to protect the business in a lawsuit.  Not her.  Not trying to get into a keyboard argument with you.  If you don't believe what I am saying, then that's fine.  You do you.  But I do know what I am talking about. 

The LLC is to separate you from the asset. If you have other assets and someone sues you, they don't have to accept the insurance limits. If they file suit against you for more than the limit and are successful, then they would have access to claim against other assets such as cash accounts, brokerage accounts, jewelry, and any other sort of asset that is worth anything. They could also garnish wages, etc. If it is held as TIC then both you and your friend would be susceptible to this. By holding the home in an LLC, the home is isolated. It keeps your other assets safe from being attacked in a lawsuit. But you have to do it correctly. Then you will only have the equity in the house that they can go after. If that is less than the insurance limit, then you will have better luck having them take the money from the insurance. I know it seems like 5 million is a big number and it will cover you against all claims, but just search the internet and you will see suit after suit where settlements are for way more than that. A wrongful death suit can be for astronomical amounts. I currently have 5 homes in Alabama and one in Florida. They are all in individual LLCs so that if something happens in one property, the others are untouchable. I would make a strong recommendation to follow the advice of @Sarah Kensinger and contact Anderson Advisors.  They are who I use and they are the best.  Tremendous value and full of educational information.

Hello everyone,

I am BRAND NEW to the real estate investing arena and have a question about how I am trying to structure my first deal. I located a house in Miami that the seller bought at auction and is asking $170,000. The house is a 2/1 with about 1300sf and a huge lot of about 11,000sf. The ARV seems to be around $200,000-$210,000 and there is about $20,000-$25,000 in rehab. I am not wanting to come out of pocket at all and have found a hard money lender that will provide 85% of the purchase and 100% of the rehab expenses at 10% interest. I am trying to see if the seller will hold a note for the remaining 15% at 8-10% interest only and then offer him 15-20% of the profit. I obviously want to get the purchase price down as low as possible but am not sure what would be a good price to still be able to profit in the end. I was hoping to get them down to about $125,000 but I don't know if they will go that low as they "claim" that they have an offer for $155,000. I don't buy it because they are still negotiating with me. Is this a good deal at $125,000? What if I go to $140,000 to try to close this deal? I want to profit but I am mainly looking for the experience. Thank you all for any suggestions.