All Forum Posts by: Da Shiek Woodard

Quote from @Da Shiek Woodard:

Quote from @Marcus Auerbach:

Considering risk vs reward most people will start with option 4 and maybe option 3 at some point later. If you buy with an LLC you will need commercial financing (and not a 30yr residential loan with lower rates), assuming you don't want to do what some people suggest and quietly move the title after you have closed on the loan.

Option 3 comes in when your portfolio exceeds a certain net worth, perhaps 7 figures, and then you will group assets in LLCs. Keep in mind this only helps if you treat the setup indeed as individual businesses, separate bank accounts etc. 

Very practical advice, thank you for that. What about the advantages that business credit might bring though from setting up an LLC?

You could still set up an LLC that functions as a PM and it will be able to grow business credit over time in the form of credit cards, Home Depot is an obvious one to start. The longer it exists and is profitable the higher it's rating. But I have not seen major LOC's without collateral and big revenue. Banks are very familiar and skeptical of shell-ish LLCs compared to let's say a manufacturing company.

Quote from @Da Shiek Woodard:

Quote from @Bjorn Ahlblad:

@Da Shiek Woodard For now I would go with option 4. I did not do an LLC until I bought an apartment building and only then because it is far more orderly. My duplexes are still im my name.

Did you put the duplexes in a trust and/or get an umbrella policy?

I have liability umbrella for all perils. It covers my NW whether I run someone over-heaven forbid-or someone slips and hurts their back at my apartment building. I don't view LLC for my protection. Good insurance does that better.
Da Sheik; may I tell you that you have a cool name. 

What are you trying to achieve? LLCs do not guarantee anonymity; only Land Trusts do that and with Land Trusts the owner relinquishes all transactions and filings to either an attorney or CPA. That's lost of control and added expense but it does completely hide your ownership. I don't recommend it unless you really need to hide and most of us just want to mitigate risk, build and preserve wealth. Please know that an Umbrella Policy only covers ONE property whereas a Multi-Property Policy - sometimes referred to as a Blanket Policy - covers more than one. I share this article almost daily with investors who are struggling with LLC versus Umbrella Policy: https://www.apartments.com/ren...

Bottom line: real estate investing is a risk based business. Some can be mitigated through insurance/titling but even more can be reduced by keeping your property well maintained, having a solid lease and enforcing it, and knowing the Fair Housing Act inside and out.  Hope this helps.

Considering risk vs reward most people will start with option 4 and maybe option 3 at some point later. If you buy with an LLC you will need commercial financing (and not a 30yr residential loan with lower rates), assuming you don't want to do what some people suggest and quietly move the title after you have closed on the loan.

Option 3 comes in when your portfolio exceeds a certain net worth, perhaps 7 figures, and then you will group assets in LLCs. Keep in mind this only helps if you treat the setup indeed as individual businesses, separate bank accounts etc. 

Hi,

There is actually another option for setting up your business to avoid the need for having many LLCs and instead you would have 2 one for operating and one for holding assets. It is slightly more sophisticated than what was described above, but you would use a Land Trust to own each property and the Land Trust would in turn be owned by an individual Series of your a Series LLC. The individual Series LLC's ownership is limited to a beneficial interest in a Land Trust, and, as such, it avoids the need to register to do business in the other State as it would if the individual Series LLC was a title holder. The Land Trust additionally offers the benefit of another level of anonymity through a nominee Trustee, while maintaining the asset protection and compartmentalization of the Series LLC. This strategy has worked for many clients that I have worked with who would like to have the liability protection of a LLC, the ability to scale without creating a new LLC each time they acquired a property while still compartmentalizing each asset. Additionally, it provides layers of anonymity.

@Da Shiek Woodard

Option 4

I have worked for several billionaires and other people with a ton of money and none of them have ever gone Wisconsin they always incorporate in their state where they are located.

I think people think they are a lot more important than they really are to think they need to remain anonymous…

@Da Shiek Woodard For now I would go with option 4. I did not do an LLC until I bought an apartment building and only then because it is far more orderly. My duplexes are still im my name.

How quickly do you want to scale? If you will stick with one for a bit I don't think there's a need for it. If you want to get a few more in 2023, it would make sense to get one just after the first of the year. I'd go for the Wyoming LLC personally, but I really value anonymity and paying as little tax as possible.