Protection and Anonymity for Wholesalers

General Real Estate Investing
1

Dear Legal Experts,

I am re-thinking my reasoning for making my Wholesaling company an LLC.

What I seek is two things:

  1. Protection for the short time that I am ever actually the true owner of a property I’m seeking to wholesale. My goal here is to ultimately protect myself from legal action from others. Tax advantages are a second consideration.

And

  1. To make myself/and personal assets un-linkable via my Real Estate investment transactions. Can I begin to do this by using two different banks for personal and business? Buy as Land Trust, etc.?

Kindly discuss the best ways to achieve these issues.

Thank you

2

you should ALWAYS have seperate banking for yourself and your business, even as a sole proprietor.

and

no one should EVER be is business as a sole proprietor.

doing business as an LLC will protect your personal property from liabilities arising from the properties you are dealing. This assumes that you properly operate the LLC (no comingling, etc), hold title in the LLC and arrange financing within the LLC.

You should probably hold your personal residence in a land trust to further insulate it from liabilities, both personal and business.

3

  1. YES I DO ALREADY HAVE THE ACCOUNTS SEPERATE (PERSONAL VS BUSINESS). I WAS ASKING IF I SHOULD USE DIFFERENT “BANKS” FOR EACH.

  2. IN OTHERWORDS, EVEN THOUGH IT’S A WHOLESALING COMPANY (NOT HOLDING FOR TOO LONG), THE LLC WAS A WISE CHOICE?

  3. OH, PUT MY PERSONAL RESIDENCE IN A TRUST. OKAY, I THOUGHT I HEARD THAT BUYING PROPERTIES IN A LAND TRUST IS THE WAY TO GO SO THAT THE PROPERTIES ARE NOT LINKED TO ME PERSONALLY AS AN INDIVIDUAL.

4

  1. seperate accounts/same bank is ok.

  2. not owning properties in your personal name is a wise choice, even if you are flipping. there is always a risk when owning properties - like when the stupid kid down the street decides that your roof looks like a launching ramp for his bicycle and you, the negligent homeowner, didn’t have the gate locked and he breaks his neck and your million dollar liability policy isn’t going to touch what mama is going to collect in the settlement. You don’t want your personal assets at risk.

  3. I put my personal residence in a trust as another safeguard since it’s my HOME. Ideally you would have all of your properties in trust, but when flipping I’d imagine that this could be a pain. If they are owned by the LLC, you are not linked to them and you are not personally liable for issues arising from their ownership.

5

This is all helpful, thanks.

Wanna here something silly that’s really bothering me? The lady setting up my business at the bank couldn’t figure how to get the computer to accept our long buniness name… so she ended up using my home address. Does that matter or hurt me in anyway down the line.

I thought it would be okay to have the statements come straight to my house but here comes all the junk mail too!

Am I still un-linkable in the situation?

6

Address shouldn’t matter, but I use a PO box for just a little more anonymity anonimyty anonom secrecy.

7

SPC,

What tax advantages will you derive from an LLC that you would not have without the LLC?

8

Hi Dave,

Well, that was another question, actually. It goes back to figuring out what is right for one’s company regarding whether or not to go LLC, S-Corp, etc… for tax advantages and pay purposes.

9

Well, for starters, the corporate income tax rate may be lower than the personal rate if you expect the LLC-taxed-as-a-corporation to make a lot of money.

If you have a management co for the LLC, you may be able to take LLC-taxed-as-partnership income as passive and avoid self employment taxes.

Corporations and LLC-taxed-as-corporations have improved employee benefit provisions, giving one more access to deductibility of benefits, 401(k) plans, etc.

Lots of tax benefits to using an LLC over a sole proprietorship.