Question:
In volume to rental agreement BSH1703A, if you require certified check for each item at the signing meeting, rent, performance fee etc. What is the down side of having the lease in your company’s name?
Answer:
Your companies name can be on the lease, but of course now the company would have to file the tax returns. The company now would have to deal with all the issues that come up. The company would have to file for the dispensaries. The company would have to hire counsel. Many cases in many states across the country if the rental agreement is in the companies name, they will not allow an individual to step in and defend that case. So, in other words you would have to hire an attorney for an LLC or a corporation or a limited partnership. Many states have this requirement. I’m not sure what state you’re in. Oh it says here Illinois. Not sure if this is a requirement in Illinois. But I would say find out for sure. You can have it in your company name. I just like to have it in an individual name common as agent. Now it really doesn’t define who you’re the agent for. You’re the agent for the company maybe or you’re the agent for the trust that owns the property.
Now, of course inside all this conversation I want each of you to have all of your properties in a separate trust. You will be hired by the trusty of the trust to manage that property. There is a management agreement in your volume four land trust and it actually is used to hire you as the manager of your own property. When I say your own property, it’s really not yours. It’s owned by the trust. You become the manager for the trust. Another reason why I like to use an individual name is because of taxes. The IRS has passive lost limitations. Basically what they’re saying is if you are not a real estate professional you don’t deserve to get the unlimited loses and unlimited tax benefits that a real estate professional gets. So, in other words this was designed for doctors and lawyers and others who were taking all the depreciation against their ordinary income. As opposed to real estate professionals like ourselves that are in the business all the time. This is all we do. So, real estate professionals have an unlimited number of deductions they can take. While people in other professions have what’s called passive lost limitations. When you as agent are the manager of the property then it further stultifies the fact that you are the manager of the property. Not some other company and we can avoid the IRS deeming that your not entitled to the passive lose limitations. There are no passive lose limitations you’re entitled to all that.
Question:
You mentioned using a persons name as agent allowing you to cash their checks. Isn’t it better to have the checks deposited through the company for record keeping purposes?
Answer:
Oh yes it absolutely is. I’m merely saying lets say that you showed up at a signing ceremony and the person only had a personal check. You go geez I don’t like this. You’re supposed to come with money orders or certified check and you’ve come with this. This is a problem. I’ll go ahead and take it this time but don’t do that in the future.
Well if the check was made payable to a company. You’d have to deposit and wait for it to be processed and find out whether it’s a good check or not. If it’s made out to you, you can walk right up to the counter the next morning and you can get that cashed or you can get it converted into a certified check. So depositing it would be fine. Of course there wouldn’t be any record keeping issues with that.
Question:
On your CD you mentioned having your office be your home. Could you elaborate on this concept?
Answer:
Let’s think about it this way. Let’s say that you buy a house. Not you but your corporation or your LLC buy the house. Then let’s say that your corporation or your LLC hires you to manage its property. In doing so it requires you to be on call 24 hours a day 7 days a week. So as a result it’s requiring you to actually occupy the corporate headquarters for the purpose of being on call 24/7. So, as part of that requirement it allows you to occupy the property at a greatly reduced rent. So, indeed you would pay rent to the corporation or the LLC for your use of the property. However the rent would be reduced because of the requirement to keep you on call 24/7. That way you could buy a very nice corporate headquarters and they corporation could require you to live there.
Question:
I have come across three investment properties of which I would like to take advantage. One being, a small trailer park. We have bought many properties in the past under conventional methods but now want to switch over to your system. However I feel very intimidated about the paperwork. We do not have any trusts set up other then a living trust. Negotiating is not a problem. What do you suggest?
Answer:
It sounds like you’re a perfect candidate for our direct Q and A. That means that any time that you’re working on a contract or your working on the paperwork and you’re not sure if you’re doing the right thing. You can fax or email that in and one of my staff can quickly respond to it or if it’s what they call a Lou question they’ll hold that for me to answer. We can get back to you very quickly. We are not attorneys. We are not CPA’s. But we do know the paperwork very well. We can help you to be comfortable that you’re doing it on your own. All you’d need to do is call the office at 1-800-578-8580 and upgrade your membership from the group Q and A to the direct Q and A.
The direct Q and A does include the group Q and A and it allows you to fax or email questions anytime you want to all throughout the month. In addition you could still listen to the group Q and A as well.
Question:
Have you had any success in offering to buy properties out of the MLS, which means the Multi Listing Service? Asking the owner, to owner finance the property to you? Thank you.
Answer:
Yes, I have had success with buying properties out of the MLS. Basically you get a realtor. Someone who’s going to research the MLS records and they’re going to find properties that meet your criteria. When they give you those leads you’ll be working with your agent and with the listing agent to make an offer. Basically if you make an offer the broker agent is required by law to present that offer. In other words the broker agent is not the one who decides if it’s a good offer or not. Only a seller can make that offer. Now this is critical for you to understand.
I would also suggest that in your contract you ask to be present when the offer is presented. This gives you an opportunity to state your case if it must be stated or to negotiate a point if it comes up while the offer is being presented. If the owner sees that you’re a reasonable person and that you are making a reasonable offer based on the situation. The owner is motivated enough to be rid of the problem and the property then they’ll look at anything. That gives you an opportunity of course to put the owner financing on the table. Of course that will already be in your contract and I do suggest that you use my contract. Now the realtors are going to bat you about the head. They’re going to say oh gee we’d really like you to use our contract. You just say well we’ve got our own paperwork and we feel comfortable with it. Do you have any problem presenting that contract? They might huff and puff but they can’t blow your house down. Just stand your ground and say I’d rather use my paperwork. Now if they intimidate you, you go ahead and use their paperwork but in the special stipulation section add the clause as per attached exhibit A made apart here by reference. What happens then is your contract will now override anything that’s in the realtor’s agreement. But you made the realtor happy because you used their agreement.
Question:
I am running into quite a few burned out landlords with section 8 tenants. Besides “wait until the landlord is more motivated” what are the one, two, or three offers that make sense to make for a scenario like an ARV of $200,000.00 with the asking price of $170,000.00, with a mortgage balance of $152,000.00. Needs $25,000.00 to $30,000.00 to bring it up to owner occupant shape or to be determined? What are your suggested minimal improvements in a land lording in a transient area that is close to the war zone or just keep as a low income rental. Mortgages and taxes are currently leased to a section 8 tenant. The seller wants out of land lording.
Answer:
So let’s answer this first. First of all, Chuck I don’t have enough information. Just merely telling me the mortgage balance is $152.000.00 doesn’t tell me what I really want to know which is the interest rate, the terms of the loan, whether it’s an adjustable rate or a fixed rate loan. Does it have a balloon payment in it? How long has the loan been infect? In other words when was it originated? These are all key facts in determining, what kind of offer I’m going to make to that owner. One of the things I always like to do it is take over existing financing. So that I don’t have to go to the bank and I don’t have to qualify for a loan. Some of you on the fall are not aware but I’ve been in the business for over 30 years and I have never been to the bank to qualify for a loan for a single family or small multi family property. The reason being, that I’ve discovered, that the seller is the bank. I’ve found out that the seller can be the bank and therefore I don’t have to go through all those gyrations. I just get that property and take over that existing financing. When the seller is the bank why shouldn’t I do that?
Now secondly, your seller is asking for almost $20,000.00 in cash. Well I’m going to justify a discounted price because of the $25,000.00 to $30,000.00 that is needed to bring the property up to shape. So, what I’d recommend that you do Chuck, is go back to your cost to sell worksheet. Now that is what we use when we’re in a negotiation with a seller. Work up the numbers to show the seller. In fact many times we work it up with the seller present. Give it in fact to the seller and start calculating and ask him, what’s the next thing on the list? Then start negotiating that point. Start discussing that point. That’s going to be an expense that you’re going to have when you sell the property. Always calculate what its going to cost you to sell their property. That convinces them that it’s going to cost them the same amount of money. As your there with the seller work up the numbers, when you get to the amount that it says the carrying costs and have you calculated it six months. I want you to calculate it using 15 percent of private money loan with 5 points as your cost of funds. So, in other words that’s going jack up your cost of funds dramatically. Now when you get to the bottom of that cost to sell worksheet, then I want you to obviously present that to the seller as what it’s going to cost you to sell the property. Now you get the opportunity to say to the seller listen there is one way I could offer you more. That’s if I were to be able to take over your existing financing on the property until we get the property sold. Would that work for you? Of course that way you’re saving the points and the interest rate and all that sort of thing that it would have cost you to go to the bank and get the loan. You can now offer to increase your offer if they’ll allow you to buy subject to the existing loan.
Now everybody on the call, should have had an, ah ha, right then. Because that gives you the opportunity now to negotiate backwards from the lowest price that you’ve offered them and have a good reason for doing so. Now we’ve got several of those built into that cost to sell worksheet. We’re going to go deeply into this at the millionaire deal maker training which is coming up March 22 through the 25 in Orlando. That’s 22 through 25th 2007 in Orlando, Florida. If you haven’t signed up for that already do not miss this opportunity to learn exactly how to structure deals and exactly how to present those offers. If you miss that you’re really missing your opportunities. You’re beating your head against the pavement generating all these leads. But you’re blowing it when it comes down to actually, designing the deal. I don’t want you to have one or two ways to structure the transaction. I want you to have 35 ways to structure a deal. When you sit down with a seller there’s not just one or two ways to structure it. That’s what you’re asking me here Chuck. You’re saying one, two, or three offers, but the lesson I want you to learn from this call is I don’t have enough information to structure those offers. Because I didn’t get the interest rate, the term and all the other things that I mentioned to you before. These are key factors in structuring a deal. This is what you need to learn. So Chuck I hope you can make it to millionaire deal maker and everyone else on the call, because that’s absolutely critical advanced training, to take you down the path of making the money. You will never make more money in this business then the time you spend negotiating with a seller. So, that has to be a key element and a key skill that you have. Every one of you needs that skill. Be sure and get yourself there. Also remember that the money is in the box on the seller questionnaire. Chuck I want you to go back to the seller questionnaire and look at that. Remember that all those things that are asked inside the box on the seller questionnaire are key critical pieces of information that we have to have.
Question:
I have a tenant that wants to buy my house but they don’t have the option fee, no money for down payment and very bad credit. My house has quite a lot of equity. Is that too risky to do the subject to and owner finance in this case? What should I do for the owner financing? Does your company provide such a service?
Answer:
Okay. Well first of all, your customer is not our kind of customer Iris. Your customer has bad credit and they have no money. Remember that our customer’s have bad credit but they have money. They have to buy their credit with us by paying us money. With no money you’re not going to give up your position in this deal. They can continue to occupy the property. They can continue to pay you rent. However you’re not going to give them an option to buy until they purchase that option to buy. Tell them that you’d be glad to work with them on accepting their tax return check, which by the way everyone on this call this is a great time of the year where people get tax refunds and we can take that money as credits towards the purchase of the home. So, those of you that just have rentals might be a good idea to contact your tenants and say listen, are you getting a refund this year? Would you be interested in purchasing this property? We’ll accept an option fee from you for the option the right to buy this property. We’ll give you up to three years to buy and we’ll give you credit towards part of your rent towards purchase of the home. Would that be good for you? Boom, boom, boom we hit them with a great opportunity right there.
Now otherwise there is no other way you could work with them Iris. Accept if they were to get a co-signer. A co-signer with good credit would be another option that you could consider to give them the option to buy. But I like money. I think that they should give you some motivation to accept them. They’re already occupying the property. So you know unless they want to make some improvements on the property and there are particular things that you’d like done for the property. Work for equity is another possibility. You go in pick out some things you want them to do. Write it up and tell them you do these things and I’ll give you credit towards the option to buy this property. That might be another thing, Iris that could help you work with the client that you’ve already got in there. That’s three good options there. I think everybody on the call learned something there Iris.
Question:
I had a deal that was scheduled to close last Wednesday and it fell apart. I was buying a house on owner financing. I submitted the contract and everything that was necessary to close the transaction with an attorney. All of the paperwork was submitted 30 days prior to the schedule closing date. My seller and I show up for closing and the attorney tells us that he can’t close because the seller has judgments that may be in his name and sits there and grills him about how he spells his name. What his social security number is etc. I was speechless. Long story short the deal didn’t happen. Turns out the seller didn’t have any judgments and now he refuses to sell me the property. I filled your affidavit with the county clerk and made sure it is referenced with the property. I already had a buyer who I was going to owner finance it to for $20,000.00 more then I was getting it for. What do I do? There is just way to much money cash flow on the table to just walk away and my potential buyer still wants the property. The attorney’s assistant told me that the attorney hadn’t even looked at our contract until two days prior to closing. She gave me copies of everything proving that. What should I do Lou? The attorney who was suppose to close this deal claims that the seller is in default because he didn’t address issue in schedule C of the title company commitment. Who do I go after and what do I need to do to get the seller to sell me the property?
Answer:
Well let’s answer that first Mike. Call the attorney Mike and I want you tell him that you plan to file a complaint with the Bar Association and the Ethics committee at the San Antonio Rio, because he has ethically and morally imploded your case. He did not perform in a proper and judicious manner. He is culpable in this manner. It is up to him to clean up this mess, not you. It is up to him to get the seller to the table. He needs to do whatever he needs to do to get the seller to the table. I’m glad you filed the affidavit and if you used my contract which, Mike I hope you did. It has an expiration date in the contract, but it also says comma plus any extensions necessary in order to complete the paperwork. Therefore, Mike you still have a contract. You still have a contract with that seller and that seller doesn’t have the option of walking.
Now even though your attorney did an inept and unprofessional job, your seller still doesn’t have the right to walk on that just because he’s offended by your attorney’s actions. So, I would call the attorney. I would tell the attorney what you plan to do and that you plan to also let the entire Investor community know of his behavior, unless he cleans this up, unless he gets it taken care of. Now he can make his own decisions about his career and about his business plan after you talk with him. If he says well screw you. I don’t care you can do anything you want to do. Then I would file a complaint with the Bar. I would tell the Bar exactly what happened.
Now Mike the other thing I always teach is to prevent the problem before it occurs. Mike I will say this to you. In the future I always want you to contact the attorney immediately after you send the contract in. Say have you order a title search. What does the title search look like? Have you gotten it back? Talk with that paralegal and find out exactly what’s going on in your case. You should never show up to a closing and not know that all the paperwork is done. The second thing I’m going to recommend to everybody on this call is that when you are setting up that closing. You get a copy of that title work as soon as it’s received in their office. You look at it yourself. The third thing I want you to do is require that they send you all the closing documents at least 24 hours in advance of the closing. We require this Mike, and in fact when we review the documents and find the mistakes. We send them back to the attorney’s office and have them fix them. We get the HUD 1 closing statement, review all the numbers and as soon as we agree to everything, we sign everything and get that back over to the attorney’s office. So now when my seller shows up everything has already been completed. It’s already been signed by me and the seller shows up, I’m not even there, because everything has already been signed off on. Mike and everyone on the call it is your job to see that your closing comes off without a hitch. Unfortunately inept, uncaring attorneys are everywhere. These people simple are operating from the present moment. Somewhat in their defense, the truth of the matter is a lot of deals fall through. If they’ve already ordered title searches. If they’ve already done paperwork and the deal falls through. They typically do not get paid a dime for that. So many of them are waiting to see, if the people show up, before they ever even, do the paperwork, which is one of the reasons why I always require my paperwork, at least 24 hours in advance. Mike that was a lesson learned and I think everyone on this call appreciates what you’ve gone through. We’ll all do things differently now in the future.
You also have a p.s. the attorney that I used also messed up another deal that I had scheduled to close the same deal. The seller’s were more patient and we where able to work it out but it took a week to do so. The attorney is the only one who advertises his services in the business card section of San Antonio Rio.com. Well there you go Mike. Now everybody who at least has my system is on this call now knows that answer.
Question:
In your experience what do tenants sue for the most? What are the top five things I need to make sure my rental property is protected from the professional tenant? I think you mean to say, I need to make sure my rental property, is protected from professional tenants. What are the five things that you should look out for?
Answer:
Typically the tenants don’t really sue until you sue them. You’re usually suing them for an eviction. So then they counter sue. One of the reasons they counter sue is for repairs. They say that you haven’t properly or adequately maintained the property. Therefore they have a right to withhold the rent because you haven’t repaired the property. Well that’s not true. In fact they don’t have a right to offset the entire rent on the property unless the repairs exceeded the amount of the rent, which is not likely the case. The judges sometimes allow somewhat of an offset but not the entire amount of rent. So, that is the main thing that they sue for.
The second thing Chris I would look out for is mold, mold, and mildew. Don’t let mold and mildew be in the property when the move in. If it establishes after they move in well that’s up to them. If they report it to you, you need to be aware of that and either remediates it or work with them on what the sources of the mold were. They could have caused it. But we need to be alert to it because its one of those trends in legal defenses right now that we need to look out for.
The third thing I would say is not exercising proper care. So let’s say for example that there was a loose railing. That handrail caused somebody you know somebody fell against it and the handrail fell and they fell off of the porch. Well they might be able to claim that you did not exercise proper care in the projection of them. Another proper care issue would be for example smoke detectors. Again all these things are covered in my rental agreement. So, it would be very wise to use my rental agreement and that’s probably going to eliminate the things that they can sue for. You should always require that repairs and request for repairs be in writing. Any time a tenant makes any request of you. You should always respond back in writing in memo form or letter form. Merely stating what they said to you and what your intension is to take care of it. Documenting your file is critical in keeping your professionalism around that tenant. When you can show a judge that you’ve kept up with all your particulars about that tenant. That you have responded in a reasonable time frame. Then the judge is going to be looking very favorably at you and not at the tenant.
Then the fourth thing I’d say is check out the tenant thoroughly. Check out their background, their history. Make sure that they are not a professional tenant and they haven’t been that for some other landlord. For example one thing that we do now is using our Comp Wiz program. We actually when they give us an address of a property that they’re moving from. We will comp that particular address, find out who that owner is, and contact that landlord. Contact that owner because they may give us a false landlord’s name or telephone number, somebody that they have set up to intercept the call. So, I find out who the owner of the proper is, contact them, and find out if they have a tenant by this name. If so I’m going to get the straight skinny from these people and find out if they’ve treated them right or wrong, keeping in mind that a landlord that wants to get rid of a particular tenant, is likely to give them a good history, so they can get rid of them. So, the other thing you want to keep in mind is to go back to their prior landlord before this one, unless they were in the property for a very long time.
Question:
How would you structure a substitution of collateral on a note? What verbiage would you use?
Answer:
In our purchase and sale agreement one of the things that we have under purchase money note is the right to substitute collateral of equal or greater value, which means that once that note and mortgage is written up, it must contain certain language that allows you to move that note and the mortgage when you do sell the property. Now what does that mean? Let’s take for example that its $100,000.00 property. The seller has agreed to carry back $50,000.00 but then you put it out on a work to own for equity, owner financing or cash sale. All of a sudden a buyer comes along. They say yes I’m ready willing and able to buy that property. I’ve got my own financing. I’m ready to go. You go but wait, to yourself, I’ve got this zero interest owner financing on this property. Well this clause allows you to move that mortgage to another property and go ahead and accept the full $100,000.00 from your new buyer today. That means your moving $50,000.00 of debt to another property and you’re going to receive the full $100,000.00 when you sell the subject property that we’re talking about.
So, Cliff’s saying what language should I use. Well in our Street Smart Borrowing System which is volume 6. We’ve got all these notes and mortgage with all these fancy clause already built in. Form 61104 that’s 61104 on your Street Smart Borrowing has the particular note with the clause. This is note secured by real estate. That particular clause says maker reserves the right to substitute collateral securing this note with like collateral of equal or greater value. That means that like collateral could be another house or another piece of real estate of equal or greater value. Therefore you’re moving that mortgage over to that new property. Now maker is you. You are the one who is the borrower. You’re the one who is the maker of the note. It is the seller that accepts that note as part of their payment for the property that their buying.
Question:
I plan to put my bank account into a personal property trust. Should I transfer my existing account or should I open a new account?
Answer:
Well I’d recommend Ron that you just open a new account. Don’t connect that old account to the new account. Let’s just start something total new. Even if you take the funds out of the old account and you put them into or deposit them into the new account. I would still set up a completely separate bank account rather then just changing the name on the old account. That won’t have a connection to your old account, which could help you in any kind of legal struggle.
Question:
The second question is I also plan to open a brokerage account for stocks. Should the brokerage account have a separate personal property trust and a separate tax payer identification number?
Answer:
Well I’d recommend Ron that you do get a separate TIN number for that brokerage account. So, that it separates your bank account from your brokerage account. That is again another number that someone would have to find that they may not have ready information on. It helps to protect and hide and mask your assets so that people can’t see exactly what you own or exactly how to reach it. If they were able to get a judgment against you.
Question:
I live in Michigan. I bought your trust program and just as I was ready to implement a land trust, I was told by several investor associates and my teacher from a class to become a realtor, that trusts are not recognized in Michigan. Can you please explain this?
Answer:
They are recognized. Let me assure you that we’ve got many, many, many users in Michigan that are using my trust and they have absolutely no problem with it. Here’s a little research you can do to set your mind at ease. Number one if you can search your county court house records why don’t you just type in the word trusts and see how many trusts come up that are recorded right in the trust name. I assure you you’re going to find thousands of trusts in your local court house that are recorded and property has been recorded into those trusts. So, that’s the first thing you should do to set your mind at ease.
The second thing is to go down to the court house and look up trust yourself. Just kind of look through all the court house records and see what you can find there. You’ll likely find trusts there. Also open the yellow pages and look up attorney. Then look up trust. There is also a web site called Martindale Hubbell. That’s Martindale Hubbell. It’s either one L or two L Martindale Hubbell and that is a listing service of all the attorney’s in the United States and their ranking or ratings. One of the things that Martindale Hubbell also does is segregate them into specialties. So if can’t find trust as a specialty in your yellow pages, let’s go to Martindale Hubbell, and look it up there. You will find attorneys who specialize in trusts in Michigan. Why don’t you give them a call and say hey are trusts recognized in Michigan. You’ll find that they are recognized in Michigan.
The fourth point I wanted to make about this is our trusts are what are called simple trusts. They are simple, flow through entities. As a result the ownership flows as a personal property interest to the beneficiary. Being a trust is merely a contract. It’s a contract between the trustee and the beneficiary. If trusts weren’t recognized in Michigan it would also have to follow that contracts are not recognized in Michigan. According to article one section ten of the constitution of the United States it says that no state shall pass a law which is in contravention of contract law. Therefore, no state is allowed to pass any such law that would be in any way overriding contracts. Since our trusts are contracts it’s impossible for the state to say you cannot do them there. The only thing they can do is pass requirements for how their administered in that state. So, hopefully Mike, that cleared it up for you and a bunch of people on this call.
Question:
Is there any way to protect my IRA from creditors including the IRS or is this something that will always be vulnerable? If it cannot be protected is there something you recommend instead of an IRA? Would it make sense to close the IRA, pay a penalty, and invest the money elsewhere?
Answer:
Well Barb, that’s several different questions inside that. But let’s start with the one that’s protecting your IRA from creditors. Indeed some states have allowed IRA to be penetrated by creditors. That’s going to be on a case by case and a state by state basis. If there is not case law in your state that has allowed people to pierce the IRA then I would say that is unsettled law in your state. It is something that I would not worry too much about. Now let’s get to a deeper issue the purpose of an IRA. The purpose of an IRA is to build for yourself an individual retirement account. It’s for retirement purposes. So, the purpose of that is to have some money when you retire. Now of course Barb, I think you’re aware of my philosophy. My philosophy is lets buy as many as rental properties as we can stand and lets pay down, pay down and pay off those mortgages. That becomes our retirement plan rather then an IRA account. But in the meantime you can keep your IRA account and just protect it by separating it, segregating it from you, using it as not yours. Now it can make sense to go ahead and pay a penalty and go ahead and invest the money elsewhere if you have very little money in the account. But it may make far more sense to move them to use it for options on other properties once you’ve gotten enough rental property for yourself. Barb, I hope that helped you and yes IRA’s can be very good.
Question:
When I sent my request for payment of principal to my mortgage company is it directed to a specific department or person in charge?
Answer:
You merely send it to the correspondence address and they will route it to whatever department handles those kinds of requests. I think what you’re asking here Phyllis is that you want to make a payment of principal towards your loan. So that your reducing the length of time on that loan by getting rid of some of the principal. Yes, that is one of the methods that I teach. So, that’s all you’re going to have to do. The letter for doing and the methodology and the procedure for doing this is all in your borrowing system. That’s volume 6 borrowing and that actually gives you all the in fact even the letters and amortization schedule and even applying additional payments towards your amortization is included in that borrowing system. So, on your disk you’re able to get all those things calculated. Hopefully, that helped Phyllis.
Question:
I have three L.L.C. single members that my rentals are deeded to. I have paid all bills out of these. I just set up an S Corporation for flipping properties and also wanted to manage the rentals through it. I have ten different accounts and would like to simple my accounting. Any advice would be appreciated.
Answer:
Well, first of all, let’s address the fact that you have three L.L.C.’s. I understand that your rentals are deeded to those L.L.C.’s but it might make more sense to deed those properties separately. It may make more sense to have those go into individual trusts. So, you would deed them out of the L.L.C.’s and into the individual trust. You could still have the L.L.C. as the beneficiary of the trust. That could take that L.L.C. off of public record in terms of being exposed. I understand that you pay all your bills out of these so that’s not going to be a problem.
If it’s the beneficiary of the land trust that owns the property. I just set up, you when on to say; I just set up an S Corporation for flipping properties and wanted to also manage the rentals through it. Well Tom you might want to think again about that. I mentioned earlier in this call about the passive lose limitation rules. You have to make sure that that’s not going to effect limitations and actually install limitations on your passive loses. Because of the way that your setting up all these entities. I would highly recommend that you talk with your CPA about that. If you don’t have one you can get Al Aiello’s course through us, which is the Gold Mind of Brilliant Tax Strategies. One of the things he includes for Street Smart students is three years of access through his consulting service. He can actually answer questions like this for you. To make sure that you’re getting absolutely the right advise. We don’t you know the thing about business is with each action there is an equal and opposite reaction. Particularly when it comes to the IRS. The IRS uses all those voluminous rules to confound and confuse us. We can make one move for asset protection purposes and complete imploded our tax strategy while doing that move. So let’s make sure every move that we make is cleared through both our legal advisor as well as our tax advisor.
Now we do provide these services. We have a relationship with the ARC, which is a CPA business entity structuring firm. They can advise you on this as well. They have a very detailed system on doing this and they actually lay out your entire financial road map when the do that. They plug in all these different entities. Then they run it by me for my comments and they have CPA’s on staff that can answer those questions as well. So, as you can see I don’t want anyone to think that what I’m trying to do is sell you stuff on the call. I’m trying to give you resources that solve your problems. These resources are critical and they’ve been hard fought for us. We spent many, many years defining and determining who can provide those services and actually understands how to do this and the business and the whole nine yards.
