Grab a cup of coffee.
My name is William Clark. I'm a medically retired Marine of 15 1/2 years of honorable and faithful service to my country. I do NOT share that for any pats on the shoulder, but to establish background. One of the things I've been trained to do is to know my enemy well, be prepared for anything that can come my way, prepare with pre-emptive preparation and even striking the enemy pre-emptively. Now, I completely understand that this is not Iraq/Afghanistan or any other hostile territory. HOWEVER, some of the same principles do apply to investing. For example, to prepare yourself. Coming from this background, I plan (from the start) to protect what I have from the start. It's pretty difficult to claim "mission accomplishment" or protect my AOR (area of responsibility) if I've already failed in my preparation with security to keep them (enemy) out. If I try to defend my AOR after my area has been penetrated/compromised, then I've already failed.
There are also cases where not everyone has the same experience with law/real estate that others do. For example, the case of service dogs and emotional support animals. There IS a difference between the two animals and ESAs are NOT legally considered service animals. I'm reading the responses of actual real estate professionals that are suggesting talking with local attorneys about LOCAL ordinances that are DEFINTELY trumped by state law. HOWEVER, there's NO mention of federal law or citing it.
Some real estate professionals (investors) complain that some real estate AGENTS do not have the same skill set as investors because some actually view us (investors) as a serious problem not a solution to make a community better. While investors really wish that agents would not make that assumption, the disabled community wishes that of the real estate investors community. Yet, few make this connection. So many are willing to jump to conclusions without getting all the facts first. I was successfully (regardless of whether some want to accept it or not) able to refute the assertions of some agents on here just by quoting federal law. As agents, part of your job is to KNOW federal law as well as state law. You OWE it to your clients if you're going to serve them with any kind of vigor and compassion. The attorneys representing your past clients in future litigation cases are DEFINITELY operating under vigor, that's for sure.
Now, back to my AOR (area of responsibility), I'm a serious advocate of asset protection....LLCs. Is this required? No, absolutely not. I mentioned in another post (after someone responded to mine) that you can feel free to lay ALL your personal assets out on the table in litigation for the attorney/judge to pick and choose what they want to clear out from you. Again, feel free to do so. I've read a very few posts on here about LLCs for tax purposes and asset protection. I've redirected a couple conversations from taxes to asset protection because not everyone pursues LLCs for tax purposes AND everyone needs to have as much information as possible to come to their own conclusion. I encourage and even implore you to do your own research about LLCs, but it basically comes down to this. 1. They keep personal assets personal and real estate assets (in this case) in a company. 2. Charging order protection (keeps someone, an attorney) from trying to take your professional assets away if they sue you personally and vice versa.
I've read a couple places on here (not that many because it doesn't happen that often, I'm GLAD to admit) where people find themselves in a rather compromising position on the wrong end of litigation. They come on here (and other forums) asking for advice. It's weird that some come on here asking for legal advice, when it's a real estate attorney that you would want to go to first, but I understand that some people are not experienced in investing and don't know where to turn. BUT, some responses are "I hope you didn't take the property in your personal name", which brings us back to LLCs. This CLEARLY implies, if you don't take a property in your personal name, then you take it in an LLC. But some of you only offer this as hind site advice once the damage is done and someone is desperate for help. One of the responses (not mine) specifically addressed LLCs and asset protection. I was taken back because whenever I (personally) bring it up, it's as bad as being the bad guy on social media. WHY are so many people almost contentious about asset protection? I understand and am GLAD lawsuits RARELY happen, but they DO still happen. Someone claims mold. During renovation, a sub-contractor falls off a ladder, someone steps in a huge hole that was covered with overgrown vegetation. An attorney took up a case where a guy bought an investment property. His brother in law was doing work to help him save money. The investor wasn't paying attention (and apparently neither was his brother in law) and the investor swung a heavy machinery bucket around while working and knocked his brother in law off the ladder, breaking his neck and killing him. The sister sued her brother (the investor) and the investor lost EVERYTHING. NOTHING was protected or even attempted to be protected. It DOES happen. Some of you will respond that this is what insurance is for. Yes, it is. But insurance doesn't completely protect everyone. Umbrellas protect you from the rain, but not from a hurricane. When an attorney looks up the assets that an investor owns (in the secretary of states website because that's one place where assets are recorded via the chain up through the county records), your investment properties (if not in an LLC) or PERSONAL residence are on that database. ANY attorney worth their salt sees this and sees that they can CLEARLY get compensation not only for their clients, but themselves. They're EAGER to get to court. HOWEVER, research LLCs and see how that protects you.
Some will argue "piercing the veil". That IS possible and a serious problem. HOWEVER, the BIGGEST reason that the veil gets "pierced' is because someone takes the time to create an LLC, but then forgets to sign ANY AND ALL documents in name of the LLC and NOT your personal name. Whether you realize it or not, you AUTOMATICALLY pierce your own veil if you FORGET (and many do) to sign in the name of your company and not your personal name. THAT is a HUGE reason the veil gets pierced.
For anyone experienced in this (and not just an emotional disagreement), respond back with your experience with this. I've researched both service animals AND LLCs rather thoroughly in the last few years. I do NOT have all the answers and will be the first to admit this, HOWEVER, to discourage and even be contentious about investors asking if they should use LLCs (even if it's for tax purposes and the conversation gets redirected to LLCs) is just as much as disservice to our fellow investors as assumptions and not doing due diligence for the disabled community and service dogs/emotional support animals is. For those investors that are in the business specifically for the purpose of helping and even making the community better, don't we OWE this to that same community??
This post can go in a few different categories, but I posted it here because it's usually the new people (which I still am) that ask these questions.
If you've read this far, kudos since there are those who will see the length of this post and not take the time to read. Some of the longest posts offer some of the best incite.
