All Forum Posts by: Weston Couch

@Benjamin Storrs I'd say it's worthwhile because they provide protection that other things like insurance simply can't, and they're extremely cheap if you look around (some attorney's offer them for free). 

On a second related note, a lot of people, like Robert here, also don't know you can use an out-of-state LLC to run any local business, meaning you can pick whatever state LLC is most practical for you. Some states for example are free to maintain annually after you've formed them, but can still own CT property.

@Daniel DiCosimo I don't think most people are aware of the potential workarounds for that due on sale concern. Yes, a transfer to an This article can explain the general process of taking a property into your own name and transferring it into the Land Trust before assigning it to the LLC. The added benefit of this process is that you can also have your attorney sign the public records as "Nominee Trustee" before assigning yourself as the "Trustee" once the Trust has been established. It means your name does not appear on public record for that property, your attorney and their address is the only thing that appears. All the while, you always have control and nobody else, not even your attorney, can manage or sell your property except for you.

As for the type of LLC structure, I'm inclined to agree with Nate if you're planning to scale and grow. A Series is generally the most cost effective option to expand with, especially over the course of a few years.

Feel free to DM me if you'd like to know more.

@Candace Price Hey Candace, I work in this area, so my answer to your structuring question is a little long winded. While it does provide premium protection to have one property per LLC for optimal asset protection, most investor would find maintaining a Traditional LLC for each property cumbersome and exhausting, especially once they have as many properties as you do. If you have ten Traditional LLCs, you have to worry about and pay for at least ten filing fees, ten separate EIN numbers and tax filings, any in-state taxes for each LLC, and possibly legal expenses for setting up each of these entities. And that's not even getting into the details of what happens if you have LLCs in multiple states, each with different legal regulations and tax obligations. Bookkeeping tends to become increasingly burdensome as your portfolio grows. This combination of factors quickly become a headache for most.

A Series LLC formed in a business friendly state such as Texas or Delaware is a much more efficient and cost-effective solution for investors with multiple properties--or even those planning to get multiple properties. To use Texas as an example, you pay a single low ($300) filing fee. There is no in-state franchise tax, although you must file "no taxes due" once annually with the State Comptroller. You can add as many Series as you like, and your properties can be scattered all over our fair nation and it doesn't make a difference for the entity. If you're banking correctly, you can manage all of your properties with a single bank account. The Series LLC is also easy to use with traditional bookkeeping methods. It can also be paired with Anonymous Trusts for an extremely high level of asset protection. You receive all of the same benefits that you would get from multiple Traditional LLCs, but with a fraction of the headaches, costs, and most of the time, legal fees. Of course, the best asset protection plan for you is a matter to discuss with your attorney, but it's a subject worth bringing up if you plan to expand your real estate portfolio.

@Joshua D. Hey Josh, I work with a lot of investors that have similar goals. Steve makes a great point, but what type of legal structure do you currently have?

@Justin Kalieb Bartram Hey Justin. Welcome to Bigger Pockets! I may be biased because I work with a group that creates a lot of LLC's for REI's, but I honestly don't think you can get started with one too early if you've got short-term plans to invest in real estate. They provide protection that insurance cannot. And while paying thousands of dollars for a more advanced structure as a beginner doesn't make sense, some of the cheap(some even free) LLC offers you can find from professionals out there make a simple structure very practical even for beginners.

Feel free to DM me if you have questions in that area.

@Marcy Angulo Hi Mary, I work with a group that handles these issues frequently and might be able to help. This article details the methods we generally use to remove equity for protection purposes.

@Brittany Goree Hello Brittany, I'm inclined to agree with Ken T. A Traditional LLC could be a great fit for that, especially if the both of your are only planning on working with one property at a time. Have you spoken with any professionals about it yet?

@Joshua Seeley I'm inclined to agree with Zachary Bohn here, but I think you're on the right path thinking about a Series. You might also find this article on how to flip-tax free interesting.

@Account Closed Hi Alex, I have experience with setting up LLC's in this context. There's a lot to be said in a full response to those questions though. I would agree with Michael that you could probably benefit from hiring an attorney even if just for a little guidance to help you navigate this decision. Anyone can set up an LLC in most states, but getting the language right where the LLC functions in the way you want can be tricky.

@Robert Timm I don't think most people are aware of the potential workarounds here. Yes, a transfer to an LLC can trigger the clause and should therefore be avoided, even though banks are hesitant to ever foreclose as long as the note is being paid. Even with the note being paid, the banks will still send threatening letters but this issue can be avoided completely by transferring the property into a land trust.

While a transfer to an LLC will cause alarms at the bank and prompt them to send you a letter, a transfer to a trust will not. A transfer to a trust is exempt from due on sale violations since banks will view transfers to a trust as an estate planning tool. That means you can buy in your name(with financing you get) and then "transfer" it into the LLC without ever receiving a letter from the bank.

This article can explain the general process of taking a property into your own name and transferring it into the Land Trust before assigning it to the LLC. The added benefit of this process is that you can also have your attorney sign the public records as "Nominee Trustee" before assigning yourself as the "Trustee" once the Trust has been established. It means your name does not appear on public record for that property, your attorney and their address is the only thing that appears. All the while, you always have control and nobody else, not even your attorney, can manage or sell your property except for you.

Feel free to DM me if you'd like to know more.