Hi Michael and fellow investors,
I see that there are a lot of smart people making great suggestions but not all of them are correct. The most important thing
they are not covering is the liability issue. They are not wrong, what they are suggesting is based on their personal experience and they have not been in a situation to defend themselves in court. If you have more than 2 properties and have not had any tenant challenges consider yourself lucky and you may want to consider doing what I am about to suggest. I have been involve in more than 650 single family transactions and am currently holding more properties than I care to mention.
Gil Barden's suggestion is the most accurate one per my knowledge and experience. The best solution to what you are asking is:
1. Purchase the property in your name so you can get the loan. If you can get a commercial loan, it is even better bcs they will let you take title in the name of your LLC or in a Land Trust
2. At the closing or right after the closing transfer the title into a Land Trust.
3. Make yourself the beneficiary of the land trust only of the lender wants to see that, otherwise make your LLC the beneficiary of the land trust.
4. If the Lender wants to see you as the beneficiary of the land trust, do it and Quit Claim your interest to the LLC afterwards. This transaction is not recordable so you keep it to yourself.
5. Make your LLC the management company of the asset as well so you can deal directly with your tenant as the Managing member of the LLC, Not the owner. This is very important.
6. Purchase a landlord insurance policy in the name of your Lantd Trust, not your personal name. This is one way to find the actual owner of a property and good attorneys know it.
Tips:
A. The trustees name should be different from your last name. Do not use your brother, unmarried sister or wife.
B. Never use your home address. Get a UPS mailbox bcs that is used as a physical address.
C. Use that UPS mailbox address as your address for your LLC as well.
D. Make the UPS as your billing address for your phone as well.
E. Always act as the property manager and not the owner. You will be happy you done this in most cases.
F. Give away 1% or 2% of your LLC to your brother, sister or a trusted friend just so you can have a multi member LLC and buy it back from them for $10. Keep the buy back part of it to yourself.
G. If you want to buy the best trust documents, use Louis Brown's trust package. His paperwork is the best. I am using it.
H. Remember that you are not going to refinance every few months. You may not find cheaper money than 4.25% interest rate so this would be a one time transaction. If you ever refinance, just repeat this process one more time. Once you set it up it takes only few minutes to repeat for the rest of your properties.
Good luck and contact me if you have any questions. :D
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P.S. I am not an attorney but I have spent a lot of time and money learning this so take it as you wish.
