Asset Protection Question
I own a 4 unit building which are all currently rented, and am underway to buy another house. If I was to use a land trust and an llc, do I need to form this before I purchase this next property??? Should the LLC be on the purchase contract instead of my name?? Currently, the 4 unit is in my own name. Any way to convert this??? Thanks in advance
Stangboy:
In terms of the property that is in your name, simply grant deed it to you trust.
Keep it simple, if it located on123 Main St. then make it the "123 Main St. Trust".
In terms of buying a property and putting it into your trust, keep it simple also. Purchase it in your name and then grant deed it into your Land Trust the next day. Most investors due this do to the fact the bank wont loan to a trust and want you to be on title.
Best Regards,
Jeff Adam
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Thank you Jeffrey for your response, but another question. If I did it that way, would that be considered loan fraud??? And what would be the chances of them calling that loan due if I kept my mouth shut???
No that is not loan fraud! People everyday put their properties into trusts for various reasons. The key here is to not let everyone know what you own.
When you go to sell or refinance you will have to sign a "Trust Certification" form.
Best Riches,
Jeff Adam
[addsig]
Fed law, Garn St. Germaine, clearly states that one can form a trust and convey his 1-4 units to same, and it does NOT trigger the DOS.
Look up Garn St. Germaine and you can read it yourself.
Lots in archives here too.
Thank you jeffrey,sorry for all these questions but should I also use an LLC as well as a land trust?? And what is the difference?? and which one is more important??
Hey Boy:
Buy and sell in an LLC and keep each rental property in a seperate Land Trust.
I would recommend you go thru a course on asset protection with someone like Drew Miles or Bill Bronchick. If you cant afford to right now, keep it simple and buy and sell in your corporation to prevent from dealer status and keep rental properties each in a seperate land trust. There are different ways to do this, which is fine, however the key is to not have everything in the same entity to protect from liablility. What happens when your roofer falls off of the roof on one of your rehabs that is in the name of the LLC?
Guess what, he cant come after your rental properties or you personally because they are in a different entity.
I am no expert in asset protection, these are some basic things that can protect you. Consult with an asset protection specialist and also CPA.
Best Riches,
Jeff Adam
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"Capture Motivated Sellers Automatically"[ Edited by JeffreyAdam on Date 10/10/2004 ]
From everything I have experienced, if you want to buy anything via an LLC your rates are much higher than buying under your name. I bought an extra couple million dollar insurance umbrella for about 300 dollars a year instead since I only plan on owning 2 buildings for the time being. Once I got up to 4 or more I would incorporate them into an LLC but all the lenders I have worked with have said that would create a situation where I either needed to re-fi under the LLC name and pay higher rates or pay the mortgages in full. Scary stuff, make sure you talk to your lender, or at least an accountant or attorney first.