All Forum Posts by: Mike S.

Avoid contacting your lender... See mistake #4

First of all I'm not an attorney and this is my personal understanding of the subject.

In theory there is no difference between different LLCs and a serie LLC (except the cost and the fact that only a few states are offering it yet).

However, series LLC are a relatively new animal in the arena and I am not sure that a lot of case law have been settled yet. Until it strength is fully tested in court, one may believe that there could be some technicalities that would make them weaker in some aspects. Until these glitches and appropriate fixes are found, I wouldn't like to be one of these test cases.

Originally posted by @Steve B.:

Has any effort to obfuscate your identity ever been successful in preventing any lawsuit ever?

The problem is that you would never know how many you avoided. But I could surely see how it can limit your attractiveness against contingency layer.

In case of a judgment against you, you will have to disclose your assets if you are ordered to. But I don't see why you would have to disclose it before. Again anonymity is not enough by itself to protect you, but it is an easy additional layer that has its benefit

I would encourage you to spend some time on the very informative videos made by Clint Coons. He is a lawyer from one of the asset protection firm that have a good grasp of real estate. There are a few other firms also very specialized in that field, some cheaper, some more expensive. They will all have their small differences and philosophy but it will give you a good primer.

If your anonymous holding LLC (WY, NV) is the sole member of your state LLC, the only information listed in your state LLC registry will be that your anonymous LLC is the member. You won't be loosing anonymity as they won't be able to go the next step to know who is behind the anonymous LLC.

The concept of liability protection from a LLC is double:

- it protects the owner from liability arising from inside the LLC (ie if you are sued for a problem due to the property inside your LLC, they can't touch your own asset that are not in the LLC). This protection is the same in every state.

- it protects your LLC asset from a lawsuit against you personally through the charging order that only grants access to any distribution taken out of the LLC to you, but can't access what is still inside that is not distributed. This protection will differ from state to state going from very weak to very strong. There also could be differences depending if the LLC is single or multi members. The states with the strongest protection as a whole, that also offer anonymity are WY and NV. WY has cheaper fee than NV. Some other states also have charging order as the only remedy, but may only do so for multi members LLC and not single member (like FL).

If you are in a state that does not give good outside protection, the trick is to create another LLC in a State where the protection is strong, and have this holding LLC own the other LLC in the weak state. You then still have the inside protection, but gain the outside protection from the strong state.

Not having your name in the LLC name or in the public records (NV, WY and NM for instance), while not giving any additional asset protection, helps to avoid opportunistic lawsuits that are made only based on what the plaintiff believe your net worth is. If they don't know that you have asset in that early stage, most lawyers working on contingency won't even touch the case as they won't expect a big paycheck at the end of the tunnel.

In Florida you need to keep your security deposit in a separate account. So I have one only for that. In addition I have a regular business checking where I deposit rents and pay expenses. I will probably add a savings account soon to keep my short term expenses reserve like major repairs and yearly taxes.

Avoid using a quit claim deed. Instead prefer a warranty deed to avoid loosing your title insurance. https://m.youtube.com/watch?feature=youtu.be&v=_uzbASbH3aY

My management corp has two accounts so far: one for the deposits and one for everything else.

I'm keeping track of every subaccount on an excel sheet.

I will probably open also a savings account for all the capex provision and year end tax.

I’m using Zelle with great success. However make sure that your bank will accept zelle payment on a business account as some like Wells Fargo won’t. Chase on the other hand is working great with it and also as higher transaction limit.