All Forum Posts by: Martin M.

Hi Allen,

I've been researching LLCs also. Have you seen the Anderson Business Advisors videos on YouTube? If not, they're well worth a look. Disclaimer, I haven't used their services, so can only speak to the quality of their videos. They're excellent. I'm also not an expert in LLCs, but just mentioning what I've learned so far myself as it may help (consult with an expert like these guys are saying). A few things that I've learned around the structure that you're referring to… Wyoming LLC, owning individual LLCs which hold the rentals…

One of the key advantages in using a Wyoming parent LLC (in addition to some level of anonymity) is that Wyoming and Nevada are "Charging Order" states. What this basically means as I understand it is… if someone were to sue you individually, probably someone unrelated to your properties, in a NON charging order state, they can go after assets which you individually own, including assets inside your LLCs.

This is the opposite of the way most people think of LLCs which is… if I place this property in an LLC, someone that sues me in relation to that property, could potentially get the property in the LLC, but they can't obtain my personal assets, i.e. house, investments etc. because having the property in the LLC prevents that.

Now for the parent Wyoming LLC's charging order protection to remain intact, seemingly there are a few aspects of it that you need to adhere to. Specifically… you cannot register the WY LLC to do business in a state outside of WY. If you were to do that, the Charging Order protections that the state of WY offers are lost as I understand it.

In terms of your question around transferring funds between entities…. (again consult with an expert which I am not, but) from what I've learned there's no one right way to do this… but it seems that if you follow these rules they're solid from an asset protection perspective and likely a tax perspective as well. Assume that each rental is in its own individual LLC....

1. No money ever flows directly between you personally and the Rental LLCs. No money ever flows directly between each individual Rental LLC
2. Money flows inbound to the Rental LLCs from the Holding LLC (contribution). Money flows outbound from the Rental LLCs into the Holding LLC
3. Rental properties are purchased directly from the bank account associated with the Rental LLC unique to that property
4. All rental checks and income are payable to the Rental LLCs, irrespective of the source, i.e. tenant or 3rd party property manager
5. Money flow to you personally is always done through withdrawals from the Holding LLC (distributions)
6. Money flow from you personally into the company is always through deposits into the Holding LLC

Hope this helps! Good luck,

Martin

Thanks David. So it sounds like for notes during the last downturn, there was a lot of opportunity between the start of the downturn and the bottom. That's helpful info.

are there any books in particular about note investing that you'd recommend? I'll check out your website as well.

Hello BP! While there may not be a housing 'crash' in the future, there will be some form of a correction with housing prices. When that happens, what niches of real estate do you believe will offer good returns for immediate cash flow and which niches do you think will offer solid long term profits (I realize these may be 2 different things)?

A few random thoughts...

Multi Family

Demand and ownership of multi family seems fairly oversaturated. In general, I wouldn't envision Multi family owners losing their shirts in a recession and being forced to sell.

Mobile Home Parks 

seem solid in recession and non-recession times so they also do not appear to be a niche where investor opportunity increases during a downturn.

Foreclosures 

would appear to be one profitable niche in a downturn.

Note Investing

Similar to foreclosures, it'd seem that there'd be an increase in profitable note investing opportunities during a downturn.

Single Family

Single Family homes of course drop in price with a downturn and can be a great long hold purchase, i.e. buy low, hold and rent while it appreciates.

Am I off with any of these... on the right track?

Would appreciate input from any other speculators out there, whether you're just getting started in real estate or have years of experience... which area of real estate do you feel there will be increased opportunities in during the next downturn?

thanks in advance!!!

Martin