FAQs for a Real Estate Investor
- You are in full control of the structure and can refinance, borrow or sell any of your assets by showing the certificate of ownership to the bank, the title co. or any other party with whom you are transacting
- You only pay for ONE LLC to be set up and the few liens to be recorded once
- The WY LLC does not need to register to do business in any state because it is not owning anything it is simply owed money
- You only pay to maintain one LLC per year less than $500 for all of your assets (Less than you pay for insurance)
- You do not need to transfer assets
- No hiding behind complicated entities or anonymous structures
- You never have to deal with attorneys
- No offshore entities whatsoever
What if later, I want to borrow against the property, the bank will want to place a 2nd Trust deed loan or a credit line etc. How could I do that if the lien you placed for the asset protection will be in the 2nd Trust Deed position?
Remember that you are the Lender LLC as well as the Borrower/Obligated party. You can simply tell the title company that you want to move the LLC lien to a junior position. We provide you with a subordination clause in your lien document that states that the lien could be voluntary pushed to a junior position if the Owner of the property wishes to record a new voluntary lien senior to the existing one. Your bank giving you a credit line or a 2nd Trust Deed Loan would ask us to first release the lien before they would provide the loan, then after they record in a senior position, the title company will re-record your LLC lien in a junior position. For instance, if you want to refinance, the title company will handle all that for you and they can release the lien first then refinance the mortgage. After the mortgage lender places a lien on the property, they will re-record the trust deed that eliminates the equity in a more junior position back secured by your property to the favor of your LLC. This is the commonly accepted procedure.
I want to strip equity on assets but my aggregate equity is close to $70 Million dollars. After telling my new attorney, about your set up, he called me the next day after researching and he was shaking his head in awe at your structure. The question we both have however is: Isn’t it too much money to capitalize a new entity with over $70 Million dollars when it is just a start up?
In some rare cases being “under capitalized” could be a problem. For instance, if a company starts with very little capital (whether cash, property, notes or any other form) and then borrows successfully but cannot make good on its debt obligation, creditors or litigants can sue the entity and the courts may say that the entity did not have sufficient capital and may place liens against any assets it may still have. This is not your case and it is not what we do. Your concern is about being “over capitalized”, so really you are wondering if there is a point at which the courts would feel someone have over capitalized an entity. (In your case you want to capitalize at over $70 Millions dollars). Well, according to federal court cases in the US, there has never been an issue for over capitalization in the legal sense. But as a general rule of thumb all the equity contributed at the time a business entity is formed (LLC or C Corporation etc.), whether the equity contributed is in cash, property, promissory notes, business assets or any other acceptable form, such equity should be more than any loan or total loans to the business at the time of formation. And the law is well established that formation is the relevant time to for assessing “adequate capitalization”. Since we have many clients with very high net worth and same concern, we do offer a credit line (from one of our corporations that hold millions in assets and cash) and we show that the credit line is secured against your LLC in WY with special wording to show that at the time of formation, the credit line was extended and secured against your capitalization amount. We keep this credit line documents and formality for 24 months, and then we cancel the credit line. I remind you that over capitalization have never been the issue in the legal sense and there has not been a court case challenging over capitalization. While the credit line will not be used by your entity, it does establish that your WY LLC had enough assets securing the promissory note and justifies such a valuation and large yet appropriate capitalization when forming the entity. Your Asset Protection Structure Starts at $4,995 Get IMMEDIATE Access to Our Library of Webinars Now! Schedule a Consultation Now! First Name * First Name * Last Name * Last Name * Phone * Phone * Best time to call: * Best time to call: * Email * Email * Submit Client Case Studies Frequently Asked Questions How the Structure Works Client Testimonials Plans and Payment Options Webinars & Resources Our Team & Specialists Blog Home If You Believe “If you believe that you are invincible and that a claim filed against you is highly unlikely because you are wise and avoid problems, confrontations, accidents and any business dealing or investments with any exposure then let me ask you this: How much do you value your peace of mind? If more than $450 a year then the one time fee of setting up and structuring this type of Asset Protection is the best investment you can make for yourself, your family and the assets your are holding and remember: THE MORE UNLIKELY AN EVENT WILL HAPPEN, THE MORE DEVASTATING IT WILL BE WHEN IT HAPPENS!” — Cherif Medawar