Comments 1 - 19 of 19 Search these comments
Am talking to my lawyer, but since there are some landlords here-how do you deal with the rental properties- LLC in your nae, an S-corp, just keep it in your name(assuming that will open you up to liability) and any other methods?
just_passing_through says
Add to that the extra accounting costs to file the taxes for the LLC.
Also add liability insurance for the LLC.
If there is a lawsuit, you cannot represent yourself. You will need a lawyer.
In California it's just cheaper to get an umbrella policy.
1 LLC per property (or per ~$200K equity if you have a couple cheap ones). Get the LLC in the state the property resides in. Then. Some other entity (if I recall they used an S-corp) that owns all of the LLCs. The S-corp should be in Wyoming I think? Better privacy and protection laws or something to that affect.
It gets complicated due to laws, how the taxes are paid or passed around each level, how you may move money amongst them if you need to and how you pay yourself.
2. Liability - perception that it may prevent someone from taking all of my properties vs. one or any. I guess if I get drunk and slide into a family of six some night they'd still get it all. Just prevents something house related from getting at me for everything. I could be way off on this too.
Getting financial planning information from youtube? Really?
Strategist says
I'm in the same boat. I even had an LLC that I got rid of because of all the hassles. Might be OK to hire an asset protection lawyer if you have 50 rentals, but with half a dozen properties and a bunch of vacant lots I did not see the need for myself.
What hassles were involved? Is it a CA thing? I used a Nevada LLC for many years and there weren't any hassles. A couple forms and a couple fees. No big deal at all. You have to do exactly the same accounting no matter what the ownership is so that isn't a hassle.
I just keep an open equity line on the rentals. That way the maximum credit limit shows up as the mortgage amount on public records, but in reality you may not owe anything on the property.
If you think this is going to protect you from an aggressive lawyer you are wrong. If you own rentals personally then everything you own is in play, including future income. Serious lawsuits aren't common so It's a gamble with pretty good odds. I don't have the desire to take the gamble even though I don't own a lot more properties than you. If you do then bon appetite.
The idea to show the world little or no equity is to dissuade potential frivolous lawsuits.
Getting financial planning information from youtube? Really?
Strategist saysThe idea to show the world little or no equity is to dissuade potential frivolous lawsuits.
An LLC isn't to protect against frivolous lawsuits. Its' to protect when someone gets really hurt or killed and lawyers are looking for the deepest pockets and a sympathetic jury that isn't interested in if it was your fault or not.
How about a land trust if your paying cash for the property
Am talking to my lawyer, but since there are some landlords here-how do you deal with the rental properties- LLC in your nae, an S-corp, just keep it in your name(assuming that will open you up to liability) and any other methods?
Which works best for you-Thanks!
#housing