- Teleseminar Thurs. / What's a Series LLC?
Published: Mon, 02/17/14
* Free Teleseminar on Notes This Thursday
* What's A Series LLC?
THE CASH FLOW EXPRESS
A Service of The Paper Source, Inc.
Feb. 17, 2014
Hi ,
Mark your calendar: This Thursday, Feb. 20 join Randy Story,
Vanessa Britt and me for a 30-40 min. free teleseminar on
brokering and investing in real estate notes. It will be time
well-invested.
Randy is the President and CEO and Vanessa is the Director of
Acquisitions of AmeriFunds Diversified Funding (www.Amerifunds.us),
one of the largest note investors. We'll talk about and take your
questions on how to find and broker a wide variety of real
estate-secured notes.
It starts this Thursday at:
2 p.m. Pacific Time
3 p.m. Mountain
4 p.m. Central
5 p.m. Eastern
When it starts in your time zone, call (559) 726-1300 and when
prompted enter the access code: 794728# (That's the number
794728 followed by the # key).
WILL NOT WORK WITH MAGIC JACK OR OTHER VOIP SYSTEMS. It will
work on your cell or land line.
Join in for what will be a great teleseminar!
Cheers,
Bill
W. J. Mencarow
The Paper Source, Inc.
www.PaperSourceOnline.com
P.S. AmeriFunds will host a networking reception at
The Paper Source Note Symposium in Las Vegas in April. You'll
meet Randy and Vanessa and network with all the other top people in
the note/cash flow industry at THE cash flow event of the year.
Get all the details -- and watch the video -- at
http://tinyurl.com/2014notesymposium
or call 1-800-542-2270.
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WHAT'S A SERIES LLC?
(and why should you care?)
by W. J. Mencarow
Editor of THE PAPER SOURCE JOURNAL
"The SLLC is so under-utilized that the title company had never
seen one."
One major problem with owning rental real estate is liability.
People can sue you for any reason -- or none at all. If you hold
title to your real estate personally you could lose everything.
That's why most real estate investors create separate entities
such as corporations, limited partnerships, trusts, or the most
recent option, limited liability companies (LLCs) to hold title to
each of their properties. At worst, they might lose one property in
a lawsuit but likely not all of them.
However, it's not cheap to create and maintain these entities.
You can form them yourself, but you'd better know what you're
doing. If you miss something and are sued the other side may be
able to have the entity dissolved, and that would expose your
personal assets.
Then there's the considerable workload and expense of filing taxes
for each entity, a multi-step process. In the case of an LLC,
if it has only one member it is considered a "disregarded entity"
and the member files a Schedule C with his or her personal
federal income tax return. If the LLC has two or more members, it
must file Form 1065 and a Schedule K-1 for each member with the IRS.
In turn, each member must file an individual Form 1040. The LLC
might be required to file and pay other taxes as well, such as
unemployment tax, property tax and state taxes. (An LLC also has the
option of filing as a C Corporation.)
Whew!
Because of the hassle and cost to create and administer these
entities, some investors put two or more properties into the same
LLC (or corporation, etc.). They know they are taking a risk by
exposing more than one property to litigation, but they reluctantly
decide it's worth it to avoid the headaches of having numerous LLCs.
Alison and I recently bought several rental properties from an
investor. Instead of creating LLCs for each, we used a relatively
new vehicle called a Series LLC, a.k.a. SLLC. It's so
under-utilized that the title company had never seen one.
An SLLC is an LLC that can hold any number of properties or
business entities in separate sub-units called "series." Each
series is theoretically protected from liabilities arising from the
other properties or entities. It's like having an LLC for each
property but only incurring the cost and administration of one.
Each series (one property or business entity) is treated
separately. Each has its own assets and liabilities, each can incur
debt, be sold, exchanged, etc. In general, creditors of one series
may only make claims against the assets of that series.
Our Texas SLLC files just one state and one federal tax return
-- even though it holds multiple properties.
As with a traditional LLC, the owners (members) of each series are
not financially responsible for the series' debts and obligations.
Not every state has laws that allows you to create an SLLC.
However, you may be able to create one in another state and
register it to do business in your state. I have not researched
the applicable laws for every state, but I did look at California.
It has not yet enacted a law that would permit an SLLC to be
formed. However, the California Franchise Board website
(snipurl.com/ca-sllc) says:
"A Series LLC that is formed under the laws of another state may
register with the California Secretary of State and transact
business in California."
To find your state's laws, search "series LLC (your state)."
Some caveats: Each series should have its own bank account. All
contracts, deeds, notes, etc. should be signed in the name of the
series (i.e., "High Profit LLC, Blackacre Series only"). Document
loans between series. Transactions between series should be priced
at fair market values with appraisals. Each series' assets and
liabilities must be kept separate from the other series.
Each asset should be owned solely by one series. In other
words, two or more series should not be co-owners of the same
property or business entity.
This is not legal or tax advice. Consult with your attorney and
accountant before you form an SLLC.
This article appeared in the December, 2013 PAPER SOURCE JOURNAL.
For a sample issue, see http://tinyurl.com/psj-sample
For subscription information see http://tinyurl.com/psj-sub
or call 1-800-542-2270.
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