A Resort, a Bankruptcy, and Anonymity? Where to Begin?

Question

Hello all! We are a couple with a permanent address in Texas. We just put a deposit down on an investment condo in Florida. We are super excited about this as it is the very first real estate buy for either of us! Having said that, it comes with a LOT of questions and several complications. Here we go.

First - about the property and some background. The property is at a resort that we like to go to, so we will be spending some time there as well. It is an adults only resort. I've been told that most lenders don't want to give traditional loans on such a property, so the owners have a hard lender that works with the property at 11.9% on 10, 15, or 20 yr notes. My cousin, on the other hand, happens to be the regional VP of a mortgage company, so I will be asking for financing through his company, but it sucks to have to open my personal life to him in that way, but I know I can trust his integrity with the process. However, if what I've heard is true, chances are, he won't be able to get us financed due to the type of property.
Secondly - I went through bankruptcy that cleared in Aug of 2018, so I know my name can't be on any investment property until 2022. Given that, despite our personal 50/50 deal, my partner will be the "buyer" for now, and we will later move the property into both our names or an LLC that is owned 50/50.

We are struggling to put the first steps in order and are a bit overwhelmed! So much so, that it is hard to keep all our questions in line.

One very important piece to this...  we would like the maximum level of anonymity!

Questions:Should we/she form an LLC (we are thinking Nevada) for its anonymity and possibly increased liability protection?Are there other hard lenders I should be looking at?How would she personally get financing then move it into the LLC without piercing the LLC and without triggering the pay in full clause? (I read a post that said that rule was possibly done away with when it's an LLC owned by the same person? But then what if it's 50/50?)If I am part of the LLC, and it owns the property now, would I be in violation of the 4 yr rule?

Thanks - I'm sure this is only the beginning.

JD Martin · Answer

Thoughts:

1. I think you almost definitely need to see an attorney to structure this properly.

2. This endeavor doesn't sound like a strong "investment" as much as a vacation home for you, as it seems like it would have very limited rental opportunity - have you gone through the potential return figures? I don't know anything about those kinds of resorts but it seems like your marketing and clientele is severely limited.

3. If it can't be financed by anything but cash or hard money loan, and you want it and don't have the cash, the interest rate is irrelevant since it's your only option.

Ola Dantis · Answer

@Nolan Haggard

I'd strongly suggest you speak with an attorney with reference to the LLC setup and anonymity.

Nolan Haggard · Answer

Is a Series LLC accepted in Florida?

Nolan Haggard · Answer

Thank you so much for all the help!  We are so new to all this and it's soooo overwhelming.

@JD MartinYes, I agree this is more of a vacation home for us that will also serve as a bit of a first investment (for experience purposes.  We hope to have more properties in the future).  We are hoping this breaks even.  If it also pays for the airfare to go play, we consider it a great success.  We do fully understand that it is not going to be a big moneymaker and quite possibly cost us a bit of money in the long run until which time we decide to sell.

- I had my cousin, a very experienced mortgage broker, look over the agreement.  He didn't see anything that flagged big questions, which was good to hear.- We fly to Florida tomorrow to meet with the owners and attorneys for closing.  Definitely running out of time but might be able to buy us a week or two if they know we are just waiting to form our LLC or whatever.

We would love to have an attorney set everything up for us, but not sure we have the time for that right now.  If we go with the structure we are seeing on multiple LLC legal websites, we would form the LLC as listed below.

Anyone who can... Please take a look at this to see what you think, understanding that we are in a pinch.1. We form an operational / management LLC in Texas (our home state).2 We form a trust and put the LLC into the revokable land trust established in Texas? (very unsure of this step)3. Form Series LLC to hold the properties.4. Form trust to hold the parent series and trust to hold the baby series LLC.5. Transfer the title into the baby series LLCQUESTIONS:If we wire the money from our personal accounts to pay the down payment because our business bank account isn't set up yet, but then set it up asap and otherwise keep everything separate aside from the down payment, should that be ok seeing as its a new business account and formation?  Everyone has to get their initial funds from somewhere right? I wouldn't think, if you're funding an initial start-up, that it would pierce the LLC as long as it's separate from then on?  We will obviously have to fund things in the business from our personal accounts - paint, furniture, etc., so that should be ok as long as we aren't using a business account to pay for personal things?

Nolan Haggard · Answer

Bump for the original post.We are coming down to the wire on our timeline.  We are to meet with the property owners 2/24.Update - I have been informed that the property falls into a category that cannot be financed by any traditional or even non-traditional means.  That leaves us to the hard money.- I have been told the terms on the hard money loan are actually pretty good for what it is.  Thoughts?- We have also found out that my previous bankruptcy will have no bearing and my name or that of an LLC can be on the loan if its hard money.

A Resort, a Bankruptcy, and Anonymity? Where to Begin?

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