All Forum Posts by: Kerry Mertz

Series LLC's are only available in some states, not all.

Umbrella policies don't always protect you in a law suit.

I spoke to an asset protection planner (part of an asset protection company that has attorney's and CPA's) and I got completely confused about how to set up a business entity for asset protection. So I'm wondering what do I really need?

I'm a buy and hold investor and I want to start an LLC to hold my properties. The advice that I got was to set up a holding company LLC in Wyoming that holds my other LLC's that are in each state that I own property in. Since I bought the properties in my name and have financing in my name, I was told to use a revocable living trust to hold the properties in, which will own the Wyoming LLC, which will own the individual state LLC's. The revocable living trust will prevent the infamous due on sale clause from being triggered. This seems like overkill. Is all of this really necessary to protect myself from a lawsuit? I should also mention the cost to set all of this up is outrageous.

From what I understand, the purpose of the Wyoming holding company LLC is for privacy, asset consolidation into 1 yearly tax return and the laws of Wyoming will override the individual state LLC's. Wyoming laws are favorable to business owners. (Again, I am still confused about all of this, so I may not have all my facts straight.)

I'd like to simplify if possible, but not too much that I'm not protected in the event of a law suit. 

Can't I just set up an LLC in each state that I own property in, transfer title to the LLC (even though there is a risk of triggering the due on sale clause, but it seems like that rarely happens anyway) and call it a day? I know that will mean more tax returns but who cares?

What have other buy and hold investors done to protect themselves?

I'd love to get a 2nd (3rd) opinion from a real estate attorney that can help me set up my business entity (and help me with estate planning).

Thanks for the advice everyone! Keep it coming!

@Michael Plante Thanks for the advice! I'll definitely look into Orlando.

I'm looking for some advice on making the move into small multi family investing. I live in an expensive area of CT and I don't want to invest locally. I currently own 2 SFH's that were purchased in the Kansas City, MO area through a turn key company so I'm comfortable investing out of state. I've been doing a lot of reading and listening to podcasts lately and I want to become a more active investor so I can make a higher return on my investment. I feel like I'm getting a bit of analysis paralysis so I'm looking for some direction.

This is my criteria:

1) 2-4 units in a B neighborhood with value add opportunities

2) Strong local economy

3) Purchase price around $100,000-$150,000 (or less)

4) Needs less than $20,000 in repairs to increase value and rents

I'm looking for suggestions on which markets can meet this criteria and local people that can help me. So far I'm looking into Jacksonville, Chicago, Cleveland, Buffalo, Milwaukee, Memphis and Kansas City.

Here are some websites that I've referred to when looking for turn key out of state properties:

This website reviews turn key providers-  http://www.turnkey-reviews.com/directory/reviews/   

This website gives data on neighborhoods within each city- https://www.neighborhoodscout.com/

This one also gives data on cities- http://www.city-data.com/

Once you have an address you can use this the check out the house and neighborhood-  http://www.instantstreetview.com/  

You can also use zillow, wikipedia and google to research the city, home prices, local economy, ect. 

These are just for starters. The process is very time consuming but worth it in the end. It took me about 6 months of research before I felt knowledgeable enough to invest out of state. Once you've figured out your city (or cities) and your criteria for buying, it becomes very easy to recognize a good deal. The first one will always be the hardest. PM me if you want any advice.

Best of luck!

My advice would be to keep your day job so that you can continue to fund your real estate projects. Once you have a large enough portfolio to cover your monthly expenses and then some, then consider making to switch to real estate full time. It's difficult to get financing when you don't have W2 income. You can partner with someone that can be more hands on with the projects and you could provide the financing.

Just curious, are you having good luck investing in the New Haven area? What towns have you focused on? I have a few buy and hold properties out of state and I'm hesitant to invest in CT because of high taxes and the economy isn't too great. Any feedback you can give me would be helpful. 

@Rick Pozos 

I also like option 2 but I think I have a lot to learn before getting into lending. I have been to some local REIAs before and they were helpful. I'll have to start getting involved again.

@Carl Fischer

I didn't know about the partnering option for the SDIRA. Thanks for the tip! I'll definately explore that option some more.

@Jessica Zolotorofe

Thanks for the referral!

@George Blower

I would love to get into note investing at some point but I have a lot more to learn. Thanks for the advice!

@Dmitriy Fomichenko

Thanks for the advice! I remember you from when you were a guest on Norada's podcast. I really enjoyed your episode and I think I listened to it twice because it was great information. I will definitely keep you in mind for future advice.

@Audrick Brown IV

I'm with you man! There's always something new to learn in real estate! Keep on learning! BP is a great resource for education.

@Brian Eastman

That was a great explanation! Thank you so much for the advice and for clearing that up! It seems like the taxes wouldn't be as bad as I originally thought.

I have about $30,000 in a self directed roth IRA and I keep going back and forth on how I want to invest it. These are the options I'm considering:

1) Get a non recourse loan and use it as a down payment on a buy and hold single family property. My hesitation with this option is the UBIT (which I don't know a whole lot about). I'm concerned that it will eat away at my profits.

2) Become a private lender or invest in notes. However, I'm not sure how to get started with either of these. The little bit of research that I have done tells me that to get a decent return I have to be an "accredited" investor, which I am not.

3) I can withdraw it from my IRA, pay the 10% penalty (it's a roth so income taxes have already been paid) and it use it as a down payment on a single family buy and hold to add to my portfolio. This is the option I'm leaning towards at this point unless I can find out more about the previous 2 options. If I went with this option, I would then set up a solo roth 401k and put the money back into a retirement account over time.

What would you do?

Hi Lesley,

Please add me to your list. 

[email protected]

Thanks, 

Kerry