All Forum Posts by: Marcus Auerbach

@Account Closed I don't think we disagree, please read what I said; your personal actions can always get you sued, plus if you make mistakes running your LLC i.e. comingle funds it's relativley easy to make the case for a good lawyer and make you personally liable. I think that is what you have meant. Good lawyers cost good money and this is not your every day smal claims court type lawyer hired by a tenant for $150 an hour.

You can probably find out the assets I own personally, because I have not put much effort into hiding anything (heck, I talk about it on BP!), but as one's net worth grows it's a consideration for many to seek the help of an asset protection specialist and set up trusts as holders of the LLCs in states like Nevada and Delaware etc.. My point is - you need to have some substantical assets before it is even worth thinking about this. For most people who are contemplating if they need an LLC or not IMO the asset protection side of it is less imporant than showing professionalism - there is just simply not enough money to make it worth while to go after them.

Mr Duplex did it again! Congrats Lorraine, nice job Micheal!

@Maggie G. most people start an LLC for two reasons: asset protection and marketing.

Marketing: operating as an LLC makes you look more professional to the outside world, regardless of renting or flipping. In a very simpified way banks don't like to lend to an LLC, because it limits your liability to what's in the LLC - and they really want more liability than an empty LLC without much assets or history. But who says you have to borrow with your LLC? You can set up an LLC and still borrow in your own name. It still makes you look professional to the outside. Plus later on it's a good thing to have an LLC that's already matured.

As far as asset protection LLC's are sometimes overrated by new investors. You first need to have assets worth protecting. If you have a few thousand dollars in equity it is hardly worth the effort. The LLC does not protect you, it just limits the exposure that you have.

Now if you buy your (second!) million dollar asset with 250k down you probably want to put that into an LLC. The reason I say second is that the equity within an LLC is not protected from creditors going after that particular LLC, but they can't go after your other ( your first) LLC or your personal assets. Its a way to ensure that when you get sued and are being found guilty and liable only the assets within that LLC are at risk (but make no mistake you are still personally liable for your personal actions).

However, even with an LLC structure, your first line of defense should always be a commercial umbrella insurance. It should take the first blow and only if that fails your assets are at risk. At that point you want to limit the damage to what's within that LLC and not everything you own. This is my most investors seem to choose to set up additional LLCs later as they grow, so they create firewalls between their assets: if one burns down they don't loose the other ones.

PS: this reflects my personal findings - I am not a lawyer and not your advisor.

I know thats not an easy one ;-)

@Scott, good thinking and I did check with my best sources, but nothing turned up as this is outside their wheel house. I am looking for someone who specializes in these types of transactions.

A client of mine is looking at a lake front lot just north of Milwaukee for about 60k with a trailer on it. Conventional lending won't work, because the structure is a mobile home. Does anyone know a lender who does this types of deals?

It will get attention, but not sure if its practical. You will get a LOT of ANGRY calls! People don't like to be stalked and some are always angry, but a picture will send some more over the edge... Plus, it's expensive - most mailing lists will be 1000+ addresses to get some returns.

Yes, no difference. LLC is a pass through entity for the IRS. Your CPA can explaain the details.

@Daren D Wagner that should not be a surprise - a legitimate business should have a person in charge and a location in the State it operates in. Forgive me if I ignore the legal loopholes, but everything else would be more like a shell company, right?

I have contemplated with the question to LLC or not myself for a long time. Most people seem to overestimate the protection and underestimate the drawbacks. Many posts on BP about that. Unless your equity in the property is exceeding several hundred thousand you may find that its not worth it and a simple umbrella insurance policy is the better option for you.

Hi @Adam Lewis welcome in Milwaukee and on BP! You will find answers to pretty much alle your RE questions here. Definitley listen to the podcasts, for example when you are in car and have some time - you will find them very beneficial and motivating. You can always send me a PM with questions, I have mentored a few people over the years. Sometimes I also give unsolicitated advice like this: it's really, really hard to become a succesful wholesaler and probably the worst and most frustrating way to get started. You have to know so much about so many different things. You have to be good in marketing (and spend some significant money on it consistently month after month - results often take half a year), you have to be good with people, negotaitions, know all Milwaukee neighborhoods and assess market value of any property quickly and accuratley, understand construction issues, know how to rehab and how much money it will cost to fix pretty much anything. Finding buyers is the easy part, please don't waste any time on building a buyers list! So it's pretty bad. Sorry for the bad news. So what could you do to get started? Househack for example. Buy a duplex and get your feet wet. Or you could raise money from your friends and family (raising other peoples money and then investing is a core function of being an investor) and then put a deal together that makes money for your private investors (family, friends etc). Raise 30k, buy a quality property and pay them a solid return. I think you have the right mindset: looking to help other people. If you build your business around this principle you will do well.