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I haven’t incorporated yet. Does it matter?

Home Forums General EHTrust/EHT Topics and Creative Real Estate Financing I haven’t incorporated yet. Does it matter?

This topic contains 22 replies, has 0 voices, and was last updated by Avatar of red12 red12 14 years, 9 months ago.

Viewing 15 posts - 1 through 15 (of 24 total)
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  • #2713
    Avatar of red12
    red12
    Member

    Is it an absolute must to form an LLC?

    #18094
    Avatar of jim_pasquini
    jim_pasquini
    Member

    No. Not a requirement. Possibly not even adviseable.

    #18095
    Avatar of bolieure
    bolieure
    Member

    Hello,

    I am a new to these boards (just got my Success Pack today!). I too have been considering forming an LLC for investing purposes since most books and articles I have read all recommend some sort of liability entity for personal asset protection. In what instances, as was stated, would it not be advisable to use an LLC for real estate investing?

    Thanks,

    Leon Bolieu

    #18096
    Avatar of scott_l._moyes
    scott_l._moyes
    Participant

    If for no other reason than Tax Purposes. Just by simply “Inc.ing” yourself you create tremendous tax savings. I recommend you get and read…

    “Lower Your Taxes, BIG TIME” A guild to the Powerful Tax Advantages of Being a… by Sandy Botkin, former IRS Attorney and Sr. Tax Law Specialist.

    He also has a book just for Real Estate Investors. I also insist that all my RBs use his material to reduce their tax liability and increase their net disposible income.

    #18097
    Avatar of red12
    red12
    Member

    @scott_l._moyes wrote:

    … I also insist that all my RBs use his material to reduce their tax liability and increase their net disposible income.

    Care to expound on that, Scott?

    #18098
    Avatar of scott_l._moyes
    scott_l._moyes
    Participant

    If you have ever read my EBook or many of my posts you will know that I entered the world of Creative Real Estate quite by accident.

    I founded a company (The Financial Fitness Revolution, LLC) and service that provides Financial Education in the to Individuals and Families. The basis of that education is the development of positive spending habits and the results are amazing and permanant.

    Basically, if a proper Spending Plan is established and followed, most families will completely change their lives in as little as 90 to 120 days. Combined with a Proper Financial Education their spending plan will allow them to free up 10 to 20 percent of their income per month to do anything they want with. There are several basic steps to achieve Total Financial Fitness.

    Just a side note here, although most people can benefit from so-called Credit Repair, the best way to “repair” your credit is to pay ALL your bills on time over an extended time period. For example; if you filed for bankruptcy today but made all your payments to all your creditors on time for the next 12 to 24 months, you can pretty much be back to a great credit score, as much as 700. Again, although working on your credit file helps the ultimate way to build credit is to establish or re-establish it and keep it current. By virtue of the Financial Fitness Program that all happens naturally.

    So, there are some basic steps that I have my clients take. They are…

    1. Get a Financial Fitness Check-Up – find out where you are and where the financial fat is in your life. It’s amazing what happens when you discover where you really are. It allows you to now see where you need to be. It is now my job to teach you how to get there using your Spending Plan and the tools I will give you.

    2. Get Smart – Learn to understand how Money, including yours, really works, not what your Broker, The Bank or your broke Brother In-Law that sells Life Ins. and Vacuum Cleaners tell you. You need a Mentor or Coach, someone who has “done it” themselves and a Plan, a Spending Plan.

    3. Develop a Workable Spending Plan for success. A Plan will leave you with more money than month. A Plan gives you a track to run on. A Plan will bring you and your spouse and your family together and not just financially.

    4. Free Yourself from Financial Bondage – Live Debt Free. Your Spending Plan will allow you to pay off ALL your debts in as little as one-third the normal time period, inlcuding your mortgage, without a raise in pay, adding money to your payments, changing your payments or borrowing more money.

    5. Pay Only Your Fair Share – Or, go “Inc” yourself. Just having an entity (LLC, SCorp, CCorp etc.) may entitle you to $10,000 to $20,000 of additional tax deductions without having to ever make a profit. Plus, you just may increase your income.

    6. Learn How to “Save Your Savings” – When your spouse comes home from shopping and proclaims she just saved 50% on her new pair of shoes she paid $25 for, ask her where the savings is. She didn’t save 50%, she spent $25. Hint: deduct $50 from your Wardrobe Spending Account and allocate it to your Savings.

    7. Learn How to Save – If you know how to register your savings accounts properly, you can take and withdraw your returns, Tax Free.

    8. Cover Your Most Valueable ASSet – (Your ability to earn income). Buy the proper types and amounts of Health, Home, Disability and Life Insurance. (BTW, I don’t sell Insurance or Investments)

    9. Preserve What You’ve Built – Establish a proper Estate Plan

    10. Build “Real” Wealth – Top Secret, if I told you now I would have to… well you know.

    The idea here is to give the RB the best chance at re-establishing themselves financially and while improving their ability to refinance the place.

    From what I understand, only 14% of all Leasees in a LO ever excersize their option to purchase. I can’t help but believe that is because they didn’t change any of their habits or take the steps necessary.

    Of the dozens and dozens of NARS EHTrusts I’ve done or been involved with, I’ve only had to do one eviction. Ironically it was my very first RB and she never would follow her plan.

    That’s probably much more than you hoped for but I think you get the idea.

    #18099
    Avatar of red12
    red12
    Member

    Excellent information, Scott! Thanks. I feel quite certain that there’s a substantial amount of financial “fat” that I could trim in my own household!

    #18100
    Avatar of None
    None
    Participant

    Scott,

    Can’t tell you how nice it is to hear someone actually working to help others and not just totally focused on themselves and making money (not that there is anything wrong with making money).

    I’ve actually tried writing a book several times myself about how I turned things around and got control just in time. It is harder to write a good book than you would think.

    Edward

    #18101
    Avatar of scott_l._moyes
    scott_l._moyes
    Participant

    @emmostrom wrote:

    Scott, I’ve actually tried writing a book several times myself about how I turned things around and got control just in time. It is harder to write a good book than you would think.

    I can honestly tell you that I know what your talking about. When Bill first ask me if I would write a book about my experiences with Realtors and Lenders I was excited. I soon learned how tough it is and the value of a good editor etc. Bill help me so much and I am grateful to him for that.

    I’ve been writing a couple of books for the last 15 years. I find so much more to write about that I never get either of them finished.

    I’m glad you got your life in order and I wish you well in the future.

    #18102
    Avatar of red12
    red12
    Member

    Well, I just got all my LLC paperwork back and now I am officially an LLC. Now, how, specifically do I use it in the context of the NARS EHTrust?

    I kinda feel like the dog who always chases cars and finally caught one; NOW wadda I do with it? :oops:

    #18103
    Avatar of scott_l._moyes
    scott_l._moyes
    Participant

    @Red12 wrote:

    Now, how, specifically do I use it in the context of the NARS EHTrust?

    I make all my offers in the name of my LLC and then have the seller assign me interest in the trust to my LLC. The LLC becomes the Investor Beneficiary not me personally.

    My LLC consists of me, my attorney and my wife. I have many LLCs but only use one to be a beneficiary.

    A new law was just passed in Utah allowing you to own many properties in one LLC but have them separated in the event of a lawsuit. It’s called Sectioning I believe. That way you don’t need to have many LLCs etc each owning properties.

    Although I would never own property in an LLC, I would have one be the beneficiary of many Trusts.

    #18104
    Avatar of red12
    red12
    Member

    So when you put your “John Hancock” on a NEO or Purchase Offer or anything else, the name of your LLC is in all the blanks, then your name followed by “as President” on the signature page(s)?

    I’ve read several posts on the board about the weakness of a one-person LLC. That’s what mine is currently but I configured it to have up to 10 members. I should make it at least a 2-person LLC, right? Any disadvantage to the Missus being the 2nd?

    #18105
    Avatar of bolieunj
    bolieunj
    Member

    You can have your spouse be the second member of the LLC but I believe it is also prudent for a third party to be a member that is unrelated to the first two (such as your lawyer or accountant) to act as the Registered Agent so that their name appears on the public record, not yours.

    Leon

    #18106
    Avatar of scott_l._moyes
    scott_l._moyes
    Participant

    @Red12 wrote:

    So when you put your “John Hancock” on a NEO or Purchase Offer or anything else, the name of your LLC is in all the blanks, then your name followed by “as President” on the signature page(s)?

    Your, LLC
    John Hancock, as Member

    The only title you want is Member, not Pres etc.

    @Red12 wrote:

    I’ve read several posts on the board about the weakness of a one-person LLC. That’s what mine is currently but I configured it to have up to 10 members. I should make it at least a 2-person LLC, right? Any disadvantage to the Missus being the 2nd?

    You really only need two members but for sure have your attorney be the Registered Agent. This does not make your Registered Agent a Member of your LLC, it just makes them the only visible person on public records.

    Also, if your Attorney is the RA then you have accomplished a couple of nice things. One; as stated above and Two; you have the benefit of Attorney Client Privilage. So if the RA is asked who or what are the Members, he/she doesn’t have to disclose that information. This is why you just don’t do your own LLC docs.

    Over 90% of the docs I see filed for LLCs are not valid. Your State will accept them and your registration and leave it up to you to defend you and your LLC, if and when the time comes.

    Just to make my point. I was at my State Dept. of Corporation on Friday filing some last minute LLC docs and such before the end of 2006. Without saying a word I handed the lady at the desk my documents. She looked up and asked if I was Jim Baker (my Attorney). I said, “no why”? And she replied, “I know his docs anywhere, we love his docs, they are the cleanest and most complete ones we see”.

    Wow, when the State Dept. of Corporations recognizes an Attorney’s docs, that’s saying someting. I just told her that he was my partner and that I had some last minute filings to do before the year end. As I walked away she wished me a Happy New Year and told me that I and my docs were welcome back anytime.

    #18107
    Avatar of red12
    red12
    Member

    Thanks, Scott. Currently my RA is the company that handled the incorporation (LegalZoom). That covers the name that’s in public record but doesn’t offer the att/client privilage.

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