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Has anyone seen the 10K advances come in?

All this government assistance sounds great but I don't think any of it applies to the investor who has obtained conventional loans from Fannie/Freddie, right? 

Dear Texas landlords,

These are troubled times but I am encouraged by the fact that several threads on BP are discussing the challenges of being a landlord in a pragmatic manner. This supportive exchange of ideas is critical and creates a sense of solace, especially in a time where roles such as ours tend to be stigmatized by the public. I am certain that I am not the only landlord who has been concerned about the eventuality that Texas tenants will have difficulty paying rent in April, May and potentially more months to come. I would like to start a conversation that addresses the following points:

1. What can we do to minimize the risk of missed rent payments?
2. What are the government or lenders doing to help landlords minimize our risk of missed payments?
3. What are some of the challenges you think we will face from the tenants or the government when trying to mitigate this risk of missed rent payments?

I would love to hear your feedback on the these three questions. Your guidance will help the Texas landlord community sustain during these turbulent circumstances.

Thanks.

Thanks for the tips @Carl Fischer and @Lance Lvovsky.

@Guifre Mora the article you referenced is very informative.

There is no shortage of content on the benefits of a Land Trust but I am curious as to whether there is truly an anonymity shield created by using one, especially in TX. 

I ask because it seems like a majority of investors will purchase property in their own names and then transfer title to a Land Trust. Wouldnt the initial recording of title in the individuals name be a dead giveaway that the individual is in the chain of title and most likely owns the property? Additionally, it is quite easy to lookup an address on the appraisal districts website followed by a lookup an the TX county clerk website and one could put the data from both together to infer the chain of title. 

So I am finding it hard to understand how an investor who manages their own properties can enjoy the benefits of anonymity using a Land Trust. Maybe I am missing something obvious but I wanted to post my concern to get some opinions.

Thanks.

Amazing response @Mike S.

Thanks.

Hi,

Imagine the following setup:

->TexasSeriesLLC that holds no assets and serves as the "parent" LLC, single member (me), member-managed, has its own EIN and bank account.

---->Cell1 - a protected series of TexasSeriesLLC that holds title to a property1, single member (me), member-managed, has its own EIN and bank account.

---->Cell2 - a protected series of TexasSeriesLLC that holds title to a property2, single member (me), member-managed, has its own EIN and bank account.


->PropMgmtLLC - separate traditional single member LLC member managed by me, has its own EIN and bank account, has a contract with Cell1, Cell2 and handles all aspects of property management for property1 and proerty2, sends monthly invoice to Cell1, Cell2 and charges a $50/month management fee for each property.

If i wanted to make an owner distribution would the flow of money be as follows:

1. PropMgmtLLC sends rental income after all expenses (including management fee) are paid to bank accounts for Cell1 and Cell2

2. Cell1 and Cell2 transfer income from their bank accounts to bank account of TexasSeriesLLC???

3. TexasSeriesLLC distributes gains to me by bank transfer 

The goal is to keep everything as separate as possible while levergaing the benefits of a series LLC. However, I am not sure if step 2 is necessary based on this structure and am wondering if CEll1, Cell2 can remit distributions directly to me since I am the only managing member for each of them?

Please advise.

Thanks.

Hi @Linda Weygant,

I know this thread is old but this is the only one i could find that aligns with my situation. I am working on setting up a Series LLC which will hold my assets. I have also created a single member LLC (disregarded entity) to manage the assets that are held in the Series LLC.

So on a high level the structure would be as follows:

Entity 1 - Series LLC - single member LLC, disregarded entity, holding company for all properties

Entity 1.1 - Series LLC Cell1 - holds title for Property1

Entity 1.2 - Series LLC Cell2 - holds title for Property2

Entity 2 - PMLLC - single member LLC, disregarded entity, manages Property1 and Property2, signs separate property management agreements with Cell1 and Cell2

My concerns is that if PMLLC charges a management fee, then it will show up on Schedule C and I will have to pay self employment tax. So my questions are:

1. Can the property management agreement not charge any fees or will that make the agreement void because it is operating without a profit motive? 

2. Is it an issue for the IRS if the property management fee that is charged is always zeroed out by legitimate/documented expenses?

Any guidance you can provide will be greatly appreciated.

Thanks.

Hi @Cathy Karowski,

I was in the same situation as you are and was conflicted as to whether I should just create another cell under the series LLC that held my real estate assets with the intent of using it as a management company. I found a great article posted by Richard Fair from the Fair Law Group in Waco, TX. Based on his guidance, it seems like doing this might not be a good idea because of some recent legislation that was passed in the Texas house. Apparently he has always been an advocatye against utilizing a cell for management of assets held in the same series stating that it adds risk to the corporate veil and creates avenues for piercing it. Considering he is the only TX attroney that I could find with an article on the subject I think its worth referencing before you proceed.

As far as I am concerned, I have gone ahead and created a separate traditional Texas LLC to manage the assets held by the cells in the series LLC. 

On a side note, If you are trying to minimize costs, might I suggest signing up for the Texas Secretary of State SOSDirect service on their website. It is actually pretty easy to use and allows you to setup new LLC's without having to pay a middleman. All you pay is the $300 Secretary of State fee to incorporate a new traditional/series LLC.

Hope this helps.

Thanks.

I read everyones comments in this thread and evaluated the various options on the table. I am ot a CPA, attorney, structural engineer but nonetheless I wanted to share my experience. I went ahead and used KGKB to create a cost segragtion report for my property and I have provided some context on the steps that I took before landing on this decision. This is a recap of my experience and should not be considered as advice. Please consult with your own legal and tax advisors for your specific situation :) 

Here are some points about my experience: 

1. I looked around the internet and spoke to a few different vendors that offer this service, most of whom were referred to on BP. The website that I felt seemed the most professional with what appeared to be a well established and mature organization was KGKB in my opinion. 
2. I signed up and started to use their Cost Segregation app. Teh signup process is your typical name, email, basic info and you are in the systerm. Simple, clean and bug free.
3. The experience with the cost segrgeator tool was very much like TurboTax where it guides you through the process of entering all your property details. Again, this was simple, clean and bug free. I actually thought their UI was well designed and had nice little tool tips for places that i was about to pick up the phone and call their support team.
4. The information their cost segregation tool asks for are simple, clear and any property owner should be able to answer them with ease. Nothing technical or complicated, just basic questions about the things that are currently present in and around your rental.
5. Once you're done entering all your details their tool prompts you to purchase a credit. When I compared prices with other vendors seemed to be quite reasonable ($399).
6. One of my bigger concerns about hitting then "Pay" button was whether this company will be there for me in the event that their report ever gets questioned by the "authorities", you know who I am referring to :).
7. To mitigate that risk I looked up individuals on their site and made some calls. Ispoke to a couple of folks in two of their US locations, the usual sleuthing before giving someone your hard earned money.
8. The good news is that named/accredited (CPA's)/qualified individuals (who can be researched online) answered my calls and provided helpful responses to my inquiries. They seemed like a legitimate organization that i felt comfortable with what I had seen so far.
9. So after my investigation i decided to pay for the report and hit the "Pay" button. The output was instant in the form of a PDF which was pretty simple to follow and enter into TurboTax in the depreciation section associated with your rental.

So to summarize, I was pleased with the quality of service and the cost segregation tool/report. However, In the event that there is an inquiry of any sorts then i will need to engage with them again because they provide a no cost "Audit defense" as part of the purchase. I believe that will be the true test of their service and commitment to their customers but for their sake and mine i am hopeful that we will not have to deal with that situation. If that happens then you can rest assured that I will be posting about my experience.

Thanks.