Hello,
I’m getting ready to set-up my rental business and bought the Nolo guides for LLC, Corp, and Living Trusts. After reading everything here and on other sites and in other books on asset protection for real estate investors, I’m not sure they are specific enough for real estate and asset protection that concerns real estate investing.
I’ve looked at William Bronchick’s website and read about his full courses on all these subjects. They seem to be more geared just for real estate investing, and appear to go more in depth as well. They are, also, 10 times as expensive. Are they worth it? Is this a case of “you get what you pay for”?
Has anyone out there had any experience with either of these courses/books? I need to make a final decision on this and start buying homes!
You don’t need any of that stuff to start your business. Just do it and deal with entities when you actually have something that justifies the cost and expense of using them.
Nolo products are good for educational purposes. Qualified planners will have an easier time explaining things to you when you have a basic understand how things work.
Guru products are more detailed educational materials, but they are too expensive for the benefits they provide IMO and are not appropriate when it comes to legal work. They do not provide the magic shield touted because you are always personally responsible for your own actions. If you are the one who built the deck that killed 10 people when it collapsed, you are personally liable. It doesn’t matter if an LLC owns the property. The same concept applies to contract disputes, fair housing claims, slip and fall, and any other liability concerns related to property. If you are the person who caused the injury, your personal assets can be used to satisfy any judgment. An LLC doesn’t do much good if you take an active role in the management of an LLC where you are an owner. Another issue with guru products is that they are not updated regularly. There is no way for the gurus to keep current when they spend all their time hawking material.
Thanks BLL for the info. I am getting a commercial loan for this property from a local bank, and they prefer that I take title in an LLC or corp (with me personally guaranteeing the loan, of course). My CPA wife also prefers it (actually demands it). The C corp seems to offer the best tax advantages for running the business, while I constantly hear that an LLC is the best to actually hold the property titles. Would I use both?
As far as the asset protection goes, I am going to be actively participating in all aspects of this business, so beyond using common sense and not going cheap on building decks, it sounds like you are saying there is really nothing I can do to cover my ass, except maybe buy a lot of liability insurance.
What do you do?
To me, it’s more of a tax question. Which entity given your specific situation will offer the best tax treatment given your goals? Your local experts who know you are the best ones to answer it.
Your plan to use common sense and insurance is best. The only thing I can add is to separate the control from the ownership. You manage the assets and some other entity, like a trust for the benefit of your heirs, owns them.