All Forum Posts by: Weston Couch

@Ben Randazzo Hi Ben, are you talking about a Series LLC? Those are the only LLC's that you can create "subsidiary" LLC's with.

@Klodian H. Hi Klodian, SDIRA's are certainly an option for REI, but they come with their disadvantages as well. Most importantly, they don't let you reap the fruit of your work until retirement age without a stiff penalty(unless you do a Roth SDIRA in limited circumstances). Are you aiming to save the income from your REI for that long? If not, there are corporate structures that can provide the same level of protection for the same cost(but give you a lot more immediate and direct control of both your properties and the income from them).

@Account Closed Good point, but you can get around that restriction by simply buying the properties in your own name then putting them into land trust(which avoids due on sale issues) and then assigning those trusts to the individual cells of the Series. That said, I wouldn't use a Series at all in CA in order to avoid the $800 franchise tax there, but the structure would still be similar and you could still buy the properties personally. What do you use?

@Bonnie Donahue

Hi Bonnie, this is just from my experience. Most people I know in your situation use a Series LLC like Jake mentioned here. A partnership doesn't compartmentalize liability as effectively, and the requirements for a C-Corp tend to be too laborious to justify it for smaller outfits. Series LLC's also allow you to scale your protection for more properties in the future with much smaller additional cost than other approaches.

If you're interested in knowing more details on those options, feel free to connect.

@Henry Li Hi Henry, I often hear these type of questions. That first one is more of a CPA question, but I think Zach addressed most of your potential down side with an S-Corp for that purpose, and yes, you'll want to check relevant state rules as Eamonn said. 

As for the second question. You can absolutely put rental properties in an LLC(I work with people that do that every day), but you do need to use a certain strategy to put the property into the LLC (or a Series LLC if you want multiple properties) without having to deal with the due on sale clause issue Zach raised.

If you'd like more information or resources on that, feel free to connect with me.

@Seyi A. Hey Seyi, to start with, I wouldn't use a WY LLC simply because they're more expensive to maintain than others, but then a trust would work well WITH any LLC. The added power of anonymous land trusts is that these Anonymous Trusts can own LLC's and real estate. An LLC typically must disclose the members of the LLC on the filing instruments called the Articles of Incorporation. However, the member listed on the filing can be an Anonymous Trust so it does not have to be your name. Since the Anonymous Trust is a private document and it is not filed with the State, anybody researching the Owner or Beneficiary of the Trust will be unable to find that information in the public records(that's the advantage to owning an LLC in a trust). Similarly, with the trusts that hold the land, anyone researching the owner of the real estate asset by searching the County Clerk records will only find the name of the Anonymous Land Trust. Since the Owner of Trust and the beneficiary is not registered with the state, they cannot find out that the Series LLC is the beneficiary of that Trust. If they wanted to fight this in court it would take again substantial amount of more time, billable ours, labor, manpower and mone

Feel free to connect with me if you have questions.

@Alan Dunlap Hey Alan, A transfer to an LLC will trigger the clause and should therefore be avoided, even though banks are hesitant to ever foreclose as long as the note is being paid. To answer your question, banks will rarely call the loan due if paymented are maintained. Even with the note being paid though, the banks will still send threatening letters. 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. You should not even receive 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.

If you need to prove ownership for financing or any other reason, you simple produce your company documents as well as your banking and accounting records. Since these disclosures are private, and not part of the public record, it does not violate the anonymity you’re seeking.

Please feel free to connect with me if you’d like to know more.

@Zachary Sexton Hi Zach, I can certainly help you with those questions, but to start off on the right foot, what are the long-term goals for this proposed partnership, beyond just that BRRRR deal in Tulsa? A legal structure can serve you(and your partners) for the long-term, so knowing where you want to travel plays a big role in deciding what path is right for you.

@Preston Smedley Well, I've seen CA investors avoid that franchise fee with a lot of success using a Delaware Statutory Trust("DST") which functions a lot like a Series LLC. It allows you to have compartmentalized liability protection(like you do with a bunch of individual LLC's) between your properties without having to fork out $800 annually per LLC. That in turn lets you grow your asset protection structure for minimal cost, both in terms of upkeep moving forward and expansion cost.

Of course, DST's still aren't free, and you'll probably still need to pay an attorney to set one up, but it's definitely a heck of a lot cheaper option for CA residents than a bunch of individual LLC's, just over the course of one year. If you have any questions about that, feel free to DM me.

@Shamsul Chowdhury Hi Shamsul, I'm not your lawyer but I can say I know people do what Justin mentioned. You can purchase the property in your name and put in a land trust that's assigned to an LLC. That addresses most of the problems you might have with buying it directly in the LLC, or transfering it directly to the LLC from your name. If you're interested in knowing more, feel free to DM or connect.