Hello, I know what pocket LLC’s are used for but can someone explain how they differ from one I set-up for my own protection. The cost difference too please. Thanks, Herbster
Anyone???
I’ve never heard of pocket LLC. What is it?
Are you asking about the “series” LLC?
Nope but check this out.
Avoiding Assignment Fees and Double or Simultaneous Closings
The idea is to make an offer in the name of an LLC, one you intend to create, just for that deal.
Example: Subject property is 123 main street, then its 123 main street LLC. (of course, check to make sure the name is not taken already before hand).
You then make the offer, and once accepted, complete the LLC procedure, which can be done in most states online, for under $150 total cost.
After that, when you find a buyer, they agree to purchase that LLC, which only owns the contract on the subject property, to the end buyer, for a fee.
The end buyer then shows up with their cash, closes the deal, and signs as the owner of the LLC.
The end buyer can keep the LLC, or deed the property, right after close (at the table really), to whatever entity or person they wish to hold title.
This is done to avoid double closes, or assignment fees, which some lenders selling REO’s won’t allow on HUD-1 statements.
A clean, fast, easy way to close, and frankly, saves money, as one closing cost set is assessed, rather than two.
Of course, the cost of the LLC, or whatever entity is in there.
Some states these are expensive to create, and if that’s the case, I’d just use a trust, and sell that, same idea, different entity…some lenders don’t like to see trusts making offers though…but, with your buyers proof of funds, and a letter stating this is the owner of the trust, here’s our cash…lenders will most likely allow it to close.
I don’t like any transaction that is used to hide things. Besides that have you considered the tax and accounting effects of selling the LLC? Selling an LLC isn’t like selling a corporation.
As to other types of LLCs, they are no different. An LLC is an LLC according to the state. It’s only a matter of different operating agreements.