All Forum Posts by: Jennifer Gligoric

There is so much I know!   Every day I learn more as well.  Welcome to BP and the community :) 

@Jonathan Bauer In my opinion, the most powerful protection method that has two factors anonymity and layers (arms-length agreements). From a legal standpoint, you want to do business under your traditional LLC (paying contractors, vendors, accepting payments, etc) and then make sure your accounting & structure is set up that any profits are immediately classified and transferred into a Series LLC which you can do with or without anonymity.

The registered agent is just for where your legal filings go, on the operating agreement and in a typical LLC filing, you would still be listed as the member or manager (depending on the state). So this does not address the need for anonymity.

Series LLC are only considered an instrument in 18 states & territories but depending on where you live & where the properties are located, you can incorporate in another state which is why Texas, Nevada & Wyoming are popular states for LLC creation for real estate investors. I prefer Texas because of all the protections and flexibility it affords but it depends on the investor, your needs and where you see your business growing, as well as, geography.

I can see why this might seem complicated, it is rather new & involved legal structuring, but once it is in place it's actually much easier to scale and cheaper in the long run for the investor.

Hey there Jonathan, my opinion is that it is best to use a Traditional LLC (or your name) for purchasing and then transfer it into a Series w/anonymity. Being RA for a traditional in this structure is ok but not for the series. You don't want to be on the forward-facing documents or it puts your anonymity at risk. I always recommend using layers of protection and starting out with the right structure in the beginning because it saves you money when you start to scale, you are less likely to be scrambling to make these changes later with multiple properties and allows you to start off stronger and in the ideal structure to protect yourself in the beginning. This is especially helpful for brand new investors for a variety of reasons, least of all, giving a powerful shield to make it harder for predatory lawsuits to be filed by those who specifically target new investors stopping their business before they even get a chance to begin.

@Nathan, I'd seriously consider getting a DST and then transferring over to a trust. That typically won't trigger a Due on Sale Clause. If in the rare case it did, the legal remedy would be to transfer it back into your name (which is so rare I don't actually know if that has been done with anyone else & not in my experience). Another advantage of a DST is that properly structured when you have it done properly by those familiar with REI concerns, is that it also is not subject to the CA Franchise tax. On top of that, the anonymity aspect is a very powerful asset protection strategy for CA investors.

It depends on how you have structured your house hacking business.  Using the right structure, in terms of how you set up your business entity, gives you more options on how you are able to leverage tax writeoffs.  I would encourage you to look at your structure and then work with a CPA or even pay for a CFO consulting company (who will help you not just save money on taxes, but the right one will help you make money in letting you know of other options with your money than a straight tax write off style).  Thank you for your service and good luck on your hack! 

I am a big fan of checkbook control retirement accounts & not just because we use them.  I feel for investors, to take back control of your money is just a very smart move.   Is there a particular reason you are more attracted to a SDIRA rather than a Solo 401k?   I'm not familiar with your setup (and you might already know this) - but, a Solo 401k is only available for self-employed individuals who have no other employees other than their spouse. If you are not self-employed or starting a new business you need to consider the SDIRA.

You can contribute up for 52k a year in a Solo 401k, as well as, much greater flexibility into what you are able to invest in - real estate, precious metals, those are viable investment options which are not offered by traditional plans - hence why this is so valuable for REI's. 

A SDIRA, if you are not self-employed or starting a new business, should be structured for REI's as a self-directed IRA owned business trust. You will need to have a 3rd party custodian and SDIRA custodians can't give financial or investment advice, but having the right structure is important to understand how to avoid UBTI. Also, with a SDIRA there are three different types of transactions that could fall under the prohibited transaction rules: Direct, Conflict of Interest, and Self-Dealing. You need to be familiar with this as well and work with a company that can help you.

We always recommend REI's have a CPA or CFO service to work with, in the end, the right partner there can not just save you money but help you make more money.

I would recommend that you get an attorney and a CPA because you are correct in that the banks will be difficult with this POA and because this is a multi-faceted problem. If they allow Dad to take an early distribution and gift them to you to reinvest (if it is in range) then you could avoid taxes on the income and gift tax. But you need a CPA for that and the limits. The CPA would need to know how much is involved. Plus, a big question would be what is he in jail for? If he is in jail for a financial crime then funds might be frozen or options normally available will not be available to you.

This is a really sticky situation with a lot of questions from what did he do, what state is he is, you are in, etc.

As far as your last statement regarding how picky the IRS is with LLC operating agreements - they don't see them and an anonymous structure would take care of that.

Good luck!

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I'd sell and get a more aggressive investment plan to invest in other properties. You could do a house hack with 3-5% down & then get a rental. You say cash flow isn't your first objective so really you need to look at what you really wat. You also say you want to move back to that house, but surely they are other homes that could be better - another poster wrote about a HELOC & doing it that way. You have options, but you have to map out what you really want to do first. That's one of the best things about this business, there are many ways you can go; but then that's also the bad thing if you can't make up your mind.

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