All Forum Posts by: Nicholas W.

 If I were a proponent of this method (which I am clearly not) I would say that the due on sale clause is just an option the bank has and they aren't required to exercise that option so it doesn't fall under fraud.

Just to be clear though, I do agree with you, and also very much appreciate your input on this matter.

 I find that very interesting because that seems to be the most common advice on biggerpockets.

They common recommendation is to transfer title via a quitclaim and it is always against the financing agreement but it is recommended that it is done behind their back while hoping the bank doesn't realize it or care since they are still receiving their payment. The other somewhat more "allowed" recommendation is to transfer title into the name of a land trust for "estate planning purposes" and then name the beneficiary of the land trust as an LLC. But even then you are still paying the personal debt (mortgage) with LLC funds which always brought up the question in my mind of commingling funds.

 Interesting, it's good to hear from a lawyer in this case. 

Quick question for you. The traditional advice for those investing in 1-4 unit properties is to secure debt in their own name and then transfer title (but not debt) to their LLC. Since the LLC is now paying a personal liability would that be considered commingling and therefore "pierce the veil"?

The majority of these posts support my original.

Another question about the traditional advice of "get the loan in your name, quit claim it to the LLC, pay for all associated costs from the LLC account." Doesn't this break the cardinal rule of not commingle funds since the loan is in your name and therefore a personal liability but it is being paid with LLC funds? Wouldn't that "pierce the veil" if it were to ever go to court and therefore offer not legal protection?

So I know this a long running debate about whether a LLC is worth the trouble particularly due to the well known issues of getting conventional financing for one. Many people passionately encourage having every property in a LLC for asset protection purposes but can anyone share a first hand experience where doing so protected them or someone close to them. I'm not talking about the story a lawyer or guru once told you but actual first hand experience. I own a service business in addition to a rental property and the service business is held in a LLC but I can honestly say that that hasn't once benefited me. Sure I may sleep better at night, but owning rental properties in a LLC is much more difficult and I'm curious to hear if it has ever actually provided anyone real tangible protection to justify the trouble.

 No problem, glad I could help!

So you are a sole proprietor and for tax purposes you will file as such. The DBA is nothing but a fictitious name, it is only used for opening accounts, writing contracts, accepting checks and so forth. But you are still the "company" you're just doing business as ABC Management. ABC Management and Geo Tan become synonymous for all legal and tax filing purposes and can be used interchangeably. So if the property is in your name and you write a lease in the name of ABC Management that is completely fine since they are synonymous.

What you're referencing is standard operating procedure for anyone starting a sole proprietorship who doesn't want to use their own name exclusively.

Hopefully I've explained this well.

After getting the DBA you will need to file for a Federal EIN. It takes a few minutes online. The EIN serves as the social security number for ABC Management. Once you have that you can go to any bank and open a bank account in the name of ABC Management.

Your plan is exactly what I did when starting as I too was looking to avoid an LLC right off the bat.

I'd recommend talking with local banks first. They will most likely be more helpful and easier to deal with than an online loan officer.

As for issue 2. I believe there are extenuating circumstances in which you can move from an FHA property prior to the 12 month requirement and a job opportunity might be one of them. Something to look into. If there is room in your numbers for property management then moving isn't a huge deal. Personally I wouldn't consider self managing from 70 miles away but that would be a personal decision.

You'll need the DBA before getting an EIN. The property manager is a non issue as the DBA can be for anything. They aren't very concerned with what you're doing with the Fictitious Name, just that you pay the fee.