All Forum Posts by: Ben Stout

Thanks a lot, Steven. I appreciate your help.

If you have a trust in which your LLC is the beneficiary, is it possible to commingle funds?

From what I've read the trust is the owner of the property and you need a trust bank account, etc... but trusts generally allow personal funds to be mixed. LLCs of course do not.

If rents go from your property manager to your ABC, Trust... do they then need to be distributed to the LLC which is only disclosed within the highly-guarded trust paperwork? Or is the LLC only a beneficiary and it's the trust operating as the business?

Hello everyone,

I began buying rental property in Tennessee this year after investing in other states for the past 10 or so years. In the past, the use of entities and liability coverage and the like was usually fairly clear (pass-through taxation/fairly inexpensive to form, etc.) Tennessee seems to be a different ball game altogether.

To form an LLC is expensive, to maintain it is $300 a year. I can deal with that. What becomes burdensome is franchise and excise tax. It's a lot. My accountant said that LLCs in TN for holding real estate are "unattractive." There apparently used to be a provision called the FONCE Family Owned Non Corporate Entity clause in which you could apply for tax-free status. That is gone.

I have looked into land trusts and found a few lawyers suggesting that they are a viable option in TN while others say they are not recognized. My accountant said I could draw up a living trust and go from there.

I had been thinking to control land trusts through an out-of-state LLC, but this is becoming a massive headache. I might be best-served by just keeping my umbrella and liability coverage sky high, but this makes me squirm.

Does anybody have any advice or insight? Thanks.

I'm not trying to sound like a know-it-all, but I did live in China for 3 years and I'm a Chinese translator.

1.) Those deals you think are deals--you can't get them. Those are reserved for entities with very large pockets that set very stringent quality guidelines and often still get fleeced.

2.) 99% of items made in China are absolute garbage. You would be very disappointed in the quality. Shockingly, most Chinese people would rather buy 3 crappy $2 brooms that break each month than spend $5 for a really good one that will last a year.

3.) What he said--Google Chinese drywall. Often materials will not even make it through customs because of the inferior quality. Ever seen a BYD? Probably not, that's a Chinese car that is the #1 sold in the country, yet no American has heard of it--because we won't let them in.

I nodded as I read all of these posts. These are some fantastic ideas and I couldn't agree more. The last house I rehabbed was an art deco style home that I kept as original as possible. I had the floors restored and everything done as if I'd want to live in it... and the result was that it was rented above market in less than a week. I agree totally with Mark... I've had very good luck finding respectful tenants when I've respected the home myself. Good paint, crown molding, and nice fixtures don't cost that much more and the quality of tenant seems to skyrocket.