All Forum Posts by: John Clark

"@John D. How does that work with a conventional mortgage"

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Simple, the LLC pledges title, you pledge to pay the mortgage. Somewhere along the line, you swear that you are the beneficial owner of the LLC. That information (beneficial ownership) may or may not be in the recorded mortgage, but you can bet your bottom dollar that the lawyers will find out in discovery against the LLC and the land trustee, and join you to the suit.

Once they join you to the suit, they will demand knowledge of your assets, and that includes assets in which you have a beneficial interest -- that's how they find out about any other LLCs. The whole thing is then rolled up with additional defendants added, and -- if proper corporate form hasn't been observed, or if all of the disparate entities were treated as one for other purposes (bank loans, etc) -- your personal liability goes through the roof.

Like someone else here said, you can run but you can't hide. You may make it too expensive for the other side to bother to get you, but that is doubtful. Too much of a paper trail.

"The fact is that not all LLCs are the same. Some are just better for asset protection then others. The best LLC structure is the Series LLC. Like any good parent, we want to protect our children. This is accomplished with the Series LLC by isolating each asset into individual series called "children series" for liability purposes inside a holding company, the parent Series LLC. And then we protect our children even more by hiding those children from being connected to the holding company with an anonymity land trust. This system (Series LLC with Anonymity Land Trust) allows you to stop a lawsuit before it is started, by taking away the chance of recovery. Though the Series LLC is one company, with one filing with the state, and one tax return, each child âseries' is treated as if it were its own LLC for liability protection."

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The LLCs have to be registered with the secretary of state. That will show your connection between the companies. If proper corporate form was not followed, the corporate veil can be pierced.

"Think before YOU write. How is Boston going to collect money from rentals done by Craigslist? "

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@Paul Sandhu, I did think before I wrote. Since Craigslist doesn't take a cut of the transaction (unlike Airbnb), the money comes from the host. What Craigslist CAN do is not permit the posting until CL has matched the host's information to the list of Boston-registered hosts. Not on Boston's list? Can't post. Boston can collect the information from CL and enforce.  AirBnB has a specialized, limited, hosting platform and takes a cut from the host and the guest. One's an apple, the other's an orange.

As for a flat tax, that's possible, although a per diem tax allows hosts who don't want to maximize rentals every year to get in on the action.

"Then there are platforms such as Craigslist. People that have an STR put up an ad. People that want to stay in a STR read the ad and contact the owner directly. The transaction is initiated and completed over the phone, through text messaging, email, or in person. There is no record of the transaction on Craigslist."

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Ah, so Boston's detection method is not utterly perfect (leaving aide neighbor complaints, etc.), and therefore Boston is not allowed to do anything? 

Think before you write @Paul Sandhu -- Boston wins this one.

The point is real simple: One cannot create a business model that ignores local laws and regulations and then turn around and say that the business model trumps government laws and regulations on the grounds that otherwise one would have to change the "business model." This is particularly true when the business model imposes externalities on people who cannot move.

If Boston is wrong, then Boston's voters will tell it that. If not, they won't, and Boston will enjoy/suffer the consequences. It's not your place nor mine to tell Boston what it must do, particularly for private corporate "convenience."

"I'm in the process of closing on a 4 unit building in CA in which I will live in one of the units. I will be raising rents about 8% since the current owner hasn't raised rents in a long time. Even if I eventual move out and make it investment property, I'll still be negative CF of at least $200 to $300 a month. I know that BP has guidelines about cash flow being the driving force in buying investment property.

Would this still be a good investment since equity would grow from rents collected?"

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My first impression is that anybody who leaves out crucial information from an investment post should not be investing at all. Why? Because the poster hasn't thought the matter through, or is making assumptions that will blow up in his face.

Your post has the measure by which you can make a decision, so there really is no need to post. I have not read the responses to your post, but I bet they come down to this:

a. Is the property appreciating more each month than the cash flow is negative?

b. Assuming the appreciation is greater each month than the cash flow is negative, does the amount of appreciation exceed your forgone opportunity cost?

c. Can you carry the net drain until payoff?

'Nuff said.

"my lease says I can switch the lease"

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What in the world does that mean? From what to what?

I'm with the tenant on this one. Given all the security breaches and God knows what with the internet these days (and every company swearing up and down that it is safe and impregnible), the less access to my financial accounts without my direct, in-time, knowledge and consent the better. Take the paper check and be thankful that otherwise she's a good tenant.

"running a new water service is about $3,000 - 8,000 depending on where the main line is located."

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Try $9,000 to $23,000. I know. I just did it.

It depends on whether there are any limitations in the contract, but certainly lost profits IS a perfectly valid measure of breach of contract, so barring anything in the contract to the contrary, I can easily see the difference in the final selling price, PLUS attorney's fees, PLUS added costs to seller (pro rated property taxes, etc.) as your liability.

AND, boys and girls, while we're on the subject of earnest money, this is a perfect example of why buyers can shove one dollar earnest money contracts up where the sun don't shine. Earnest money forfeit doesn't even begin to make sellers whole.

"'Airbnb can not track the 120 days annual usage, because most property owners are also signed up with VRBO and other platforms, so they only have knowledge of their own bookings, but not the total with all platforms."

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Which is why I wrote the above post:

"If you are worried that someone would rent out a unit on AirBnB after having rented it out on some other platform for 120 days, it would be Boston's duty to inform AirBnB that the listing is not valid because the 120 day limit was reached."

So once Boston sees a rental totaling 120 days regardless of platform, Boston tells the platforms to kill the listing.

Let's say Boston tells the platforms to report monthly the number of days per rental unit. Boston can send warning notices to each platform once the culminated number of days for a unit reaches 90, and the platforms can start rejecting reservations that would put the unit over the top. In the meantime, if there is an overage because someone gamed the system with split-platform reservations, then Boston can tell the platforms to kill the listings and go after the offending owners

Home Rule can be pre-empted by the state legislature with a specific declaration that the specific statute is exempt from home rule. The rent control ban has such a declaration. Chicago cannot evade the ban. The state law needs to be changed first.