All Forum Posts by: Mike S.

If the property is homestead, by statutes  only liens over $250 can be sold, liens under $250 will automatically be held by the county.

Most of the liens held by the county that are not homestead are useless piece of land.

If you don't believe that the liens will be redeemed, you will have to request a tax deed sale before the 7 years deadline. For that you will need to buy all outstanding certificates. If that is your goal, then why not buying them now and get the interest on them already.

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Tax lien certificates in Florida are valid up to 7 years. After 2 years you can start the request for a tax deed auction. You will have to pay all outstanding tax certificate on that property and some auction fee. The whole amount of what you paid will be the starting bid price for the auction (except for homestead where it will be 50% of the assessed value). If nobody else bid on it, you get the property. If someone else bid, you get your money back.

I would add:

management company (for your rentals and LLCs): C corp

Flips : S Corp

But these are general rules, and your situation may justify other setup. It all depends on your goals and specific situation. That is where a real estate/asset protection attorney can help you figure out the best structures.

Each state has different tax lien rules. In Florida for instance, when you purchase a tax certificate, after two years you can force the property to be sold at auction (after buying back all other outstanding certificates), but your only privilege is that you are automatically entered as the first bidder for the price of your certificates. So your chances of getting a property on a tax deed are almost non existent.

Also, the taxes certificates are sold once a year at auction, where the winner is the lowest interest rate bidder. Many institution will bid all the way down to 0.25% and it is very hard to compete against them. They will get a minimum statutory 5% total interest for a certificate that could be in their hand for up to two years. So you don't get a lot of return for your money, unless they are redeemed very fast...

There are still some deals to get, but with a lot of hard work, to locate county held tax certificate that will give you a better return. But they are scarce as most of them are useless pieces of land in between highways. Also, some counties, while you can buy online at the annual auction, will require you to come in person to pay in cash to buy these leftovers.

I do have a small part of my portfolio in tax certificate, but I am doing it more for fun and to educate myself as I am not sure so far that my returns are worth the time that I have invested in it. But it is a good diversification with a very low risk.

As other explained above, it is really easy to register an LLC and you can do it yourself or with the use of one of the online registered agent service. A registered agent can cost you as cheap as between $35 and $75 per year depending on the state. The initial filing fee also varies between state (an average of $150).

However, where you want to have a lawyer involved if for the drafting of your operating agreement. The standard generic templates that are provided by some state or online services are ... standard and generic.

You want an asset protection, real estate oriented operating agreement. That is what will protect you. As each situation is different, yours should be taylored made for you and your specific needs.

If you transfer your property (limited to residential 1 to 4 units) to a land trust where you are still the beneficiary, the Garn-St Germain act prohibits the exercise of the due on sale clause in regard to “A transfer into an inter-vivos trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property.”

Even if the case initially was brought due to an estate planning issue, there is no mention in the act about the need to be for estate planning, only that you are still the beneficiary. That is why it is extremely important that you are the initial beneficiary of the land trust.

Later when you assign that beneficial interest to the LLC, it will be a private, non recorded act.

One way of transfering properties to your LLC is to use a land trust.

You create a landtrust where you are the beneficiary.

You then do a warranty deed of the property to the land trust. Most state won't charge you transfer tax as you are still the benefiary and there is no change of control, you may have still to pay a minimum stamp tax just for the recording of the deed.

The Garn St Germain act will also protect you against the due on sale clause accelerating your mortgage.

Later, you assign the beneficial interest of the land trust to your LLC. As this assignement is private and not recorded it will not trigger anything. Some state may require some transfer fee if you change the beneficiary, but if you are still the ultimate beneficiary of your LLC, you may argue that it hasn't changed.

If down the road, your bank requires you to proove that the beneficiary has not changed, you can always reassign the beneficial interest of the land trust back to you for that process if needed.

Offshore asset protection is great for assets that are not in the US (foreign properties or bank/brokerage accounts). If your property is physically in the US, it is really easy for a US jurisdiction to directly assert control over it without bothering with your offshore entities...

LLC offers 2 kind of protection: Inside protection (liability arising from inside the LLC should not propagate outside to your other assets), and Outside protection (liability from something outside the LLC should not touch your assets inside the LLC).

The Inside protection is almost identical in every state. The Outside protection however varies greatly depending where the LLC is formed. Only a few states have the charging order as sole remedy that would create that great layer of outside protection.

As it is generaly better to have the LLC in the same state than the property, if you are in a state that does not offer charging order protection, it is then advised to open an holding LLC in a state like WY or NV that will own the LLC to create that outside protection.

You can create the LLC(s) yourself for a few hundred dollars (depending on the state) and have an attorney draft a good asset protection operating agreement for around $1000 to $2000 depending who you choose. You will find better deal if you form multiple entities.