All Forum Posts by: Tim Priebe

Ok, to summarize:

1. Yes, creating entities can be a good thing. They are a tool and like all other tools if used properly and for what they are intended for it is good and can be beneficial.

2. Yes, you need to understand why you are creating the entity and how to "run" it properly- setting it up, funding, maintaining, etc.

3. All things in moderation. Simple is good. "Asset protection", like vitamins and the special mud from the bottom of the Dead Sea that claims to make my wife's face smoother, can be and many times are oversold. Hyped. Born from fear mongering.

4. This can be a distraction from you researching, finding good deals, buying, owning and cash flowing more "doors". Don't let it.

5. Having a relationship with an attorney can be a good and beneficial thing. Same for the insurance person, CPA, bankers, etc. All have a place on your team.

6. Everyone has a story. Good stories (In RE for 50 years, never had to use an attorney) Bad stories (On my first deal got pulled into a construction defect lawsuit with 50 other defendants) Don't base your approach to RE on either extreme.

There is an incredible amount of wisdom, knowledge and experience from the collective on this site. I am glad that I found it.

@Janet R.  I represented an estate in California back in 2007/2008, Peter Jackalus. You assisted the estate selling a condo in HI. You did a great job. Really thought about convincing the estate to fly me to HI to make sure the faucet was not dripping or the door left unlocked.  

@Doug Cobb  Not knowing the actual plan, I can't comment on that. However, the general idea is a bad one IF they are false liens (ie, debt/lien is not legitimate) and the creditor finds out, a court may void the lien. Then you have a judgment to deal with and the money you paid for the lien program wasted.

@Bill Gulley   Your comments about DOSs were similar to my outline for the five minute podcast!

@Seth Mosley  I would consult a TN lawyer. There is always devils in the details. Incorporating in one state for one benefit almost always bring one (or more) detriments in the other state.

@Jeff S.  Not giving legal advice but that approach is sound. But please remember, he is an attorney so threats of litigation are not such a big deal. When I married my wife, I used to tell her ex not to pull any baloney as I heard she was sleeping with her attorney. She never went back to court after we got married.  

To all: this is a vibrant, educated and opinionated group. I like it.

Would anyone be interested in a podcast on due-on-sales clauses? This is an area where I see a lot of bad advice and google educated posts.

@Seth Mosley

Yes, what Scott said was correct. If an insurance company can use one of their exclusions to not provide you coverage, they will. This has nothing to do with the Judge but instead it is your insurance company that will make that decision. Intentional wrong acts are one of those exclusions. You punch your tenant in the nose while fixing the toilet, he sues for damages, your insurance will not cover you. However, a good plaintiff's attorney will not plead intentional acts in his/her civil case against you because he/she wants the insurance coverage. (Ancient lawyer secret)

@James Kendrick

You have some misconceptions on the law. For example, an insurance company will not be named as a defendant in the lawsuit. In fact, the mere mention of insurance coverage can cause a mistrial. 

Also, a judge is not going to dismantle your LLC until and unless a judgment is received against you and the plaintiff is now attempting to collect. Have I done so before, yes. A entity, corporation or llc, can be pierced by you not complying with the law to keep it valid. All the better reason to have a relationship with your attorney and not legal zoom.

Scott:

What you are looking to do is not a big deal. I have not had a client trigger a due on sale clause due to this type of transfer. I will post more once I hear the podcast.

Tim

Seth:

We have transferred properties in and out of LLCs due to some banks not wanting to loan to the LLC. You are going to have to personally guarantee the loan so some banks do not care. It is not a huge obstacle.

Tim

Seth/Kyle:

While I am not an experienced investor, I am an experienced attorney. I understand both sides of the situation but let me pass on some street experience. If a plaintiff's attorney sees that you own the property personally and they find that you have other assets (ie, other pieces of property), they get excited. You never want to excite a plaintiff's attorney. If they see other property on the table, they are more likely to take on the case and sink their teeth into you further.

Yes, the insurance guys have a good point. Insurance is mandatory cost of doing business. But what if the insurance does not cover the situation? Insurance companies love you while you are paying premiums but get very picky once there is a claim. What happens if your situation is one of those many exclusions that rarely get attention until a claim is filed? Then you are on the hook personally.

Plus lets talk about the IRS. You want them to see that this is a legit business. Running everything off of a Sch C is not a great idea. Plus if one property gets the IRS' attention so does all of your personal stuff. With an LLC, you only have the LLC audited. Plus, according to TurboTax, your chances of an audit with an LLC are .04%. With a Sch C it is, 1.17%.

They are not hard to maintain. I teach my clients how to do it themselves once we set it up for them.

Hope that helps.

Tim 

My name is Tim Priebe and I am a very recent member to BP. My family and I live in Colorado Springs, CO. I have helped friends with flipping houses and now I want to have my own. I am an attorney but I am wanting to diversify my income sources. Part of my practice is RE law and I am in the process of being licensed as a broker.

I really like the BP website and the amount of information here. I just listened to my first BP podcast this morning and found it to be very educational. I am really excited to start this process and grow.

Tim