All Forum Posts by: Mitch Kronowit

Very simple - send it to me!!! :mrgreen:

Seriously, in the current climate, I am more inclined to leverage my cash than pay off debt. Yes, I am doing both, but I'm placing far less capital towards debt, which should get paid off just fine if and when inflation rears its ugly head, and allocating the majority towards financing at these super-low rates.

Here's the "Rest of the Story". What your Nevada-based entity formation company above failed to mention was Robert Thompson's report (20 years old by the way) found the national average for veil-piercing was just a little above 40%, not that far away from the California rate. In addition, cases where the court set aside the entity were largely rooted in instances of fraud and were dominated by contract law disputes, not torts.

Lastly, the Corporate Service Center you quoted actually LIED about the highest rate. Montana and Tennessee had veil piercing rates in the 68% range with North and South Dakota in the 80's!!!! Now, reasons for why some rates were higher than others were difficult to determine. One reason cited California's liberal political climate as a reason for its 45% rate, however, that doesn't explain the exceptionally high rates in "Red" states such as Montana, Tennessee, and the Dakotas mentioned above. Perhaps the reason has more to do with the TYPE of people forming these entities and not the STATE where they were formed.

Because Kansas has a much lower automobile accident rate than Massachusetts, are we to conclude the drivers in Kansas own better cars?

http://works.bepress.com/cgi/viewcontent.cgi?article=1008&context=peteroh&sei-redir=1&

@George - I believe you are correct.

@Todd - If you are in a car accident or personally held liable for damages in a lawsuit, assets held within your LLC may or not be seized according to the charging order protection your state provides.

@Ken - I agree with most of what you're saying, but an LLC is another layer of protection and its cost/benefit depends on a variety of factors. In a nutshell, I believe acting in an ethical and responsible business-like manner provides 80% of your protection, a good insurance policy protects another 15%, and and LLC covers that last 5%. My understanding is an insurance company is unlikely to pay a claim if negilgence is involved whereas an LLC will still offer some protection so long as there was no evidence of fraud or misrepresentation.

According to who?

In the event of a lawsuit, the plaintiffs are 99.9% likely to name the property's "owner", so you want that to be your LLC, and not yourself, although you can be named personally if they figure out who owns your LLC as well.

I'm not aware of any state that requires you to hold a license in order to manage your own property. As far as forming an LLC, I believe it's more important to have it hold the title to your rental properties than act as a management company while you hold title in your own name.

With all due respect, you said your rental was in a "low income" area. I do not equate that with a "lower middle-class blue-collar" neighborhood. Not in my book. Also, I never said nobody should ever invest in a low income area, but something new investors need to take into serious consideration when contemplating their first rental or two. Lastly, yes, I prefer investing for appreciation growth, but I didn't simply wake up yesterday and began thinking about cash-flow rentals in Houston. If you read my post again, you'll see I'm considering a place for my own personal use on occasion for the next year or so with the possibility of selling it once that use is no longer needed.

I'm toying with the idea of buying a duplex in Houston, living part-time on one side & renting out the other. Once I'm done with this work assignment (1-2 years), I'll either unload the thing to another investor or keep it for cash flow. What can you tell me about the Houston area? I don't invest in pi$$-poor war zones, but I do like lower middle-class blue collar type neighborhoods. Proximity to the airport (less than 30 minute drive would be ideal).

It's an idea, but I believe the trick would be convincing the court the sale of units on the eve of a lawsuit were truly for "valid business purposes" and not a weakly veiled attempt to complete a fraudulent transfer/conveyance.

My philosophy regarding asset protection mimics the layers of an onion. The outer layer is simply behaving in an ethical and responsible business-like manner (not acting like a jerk, no slum-lording, no negligence, etc.). The second layer is insurance and the last is some sort of entity protection.

I'm not overly concerned with valid law suits because I do nearly all I can to avoid them. However, frivolous law suits do scare me a little, so I figure the more layers my "onion" has, the longer "knife" (legal expenses) the plaintiff better be prepared to wield.

Very good question David. I can see it making a big difference. In my case, I (personally) am the account holder with my LLC as an additional name insured. The only exception is a property that my wife purchased, so she is the name insured along with my LLC.

I don't believe I could open an account under my LLC because my insurance company doesn't write business policies, but they were willing to add the name of my company as an additional name insured because all the LLC members, just me, are also members of the insurance company. This is the biggest reason I haven't sold 1% of my LLC to another party in order to gain some charging order protection, i.e., I would lose the ability to insure my rentals using my current carrier and would probably have to transfer everything over to a business underwriter (no doubt adding a great deal of cost).

Now, I wonder, if the other party I sold 1% of my LLC to was also a member of the same insurance company... hmmmmm (sound of gears in my head beginning to turn). :idea: