How to Create Privacy and Protect Assets

Mike: Welcome back to the flipnerd.com REI Classroom where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.

Jim: Hey, everybody. I am Jim Ingersoll. And it’s good to see you. I am your host for the REI Classroom today and I’m going to talk to you about a very important topic, which is privacy and asset protection.

Mike: This REI Classroom real estate lesson is sponsored by uglyopportunities.com.

Jim: If you don’t get this right there will be people that come after you to try to steal your assets. So you’ve got to protect your assets because you work hard to create all this cash flow and all this equity. You don’t want to lose it and there will be people that come after you. So here’s the way I look at this. I look at it sort of like an onion. You start with a big onion if you’re going to make something good in your kitchen and you peel back the layers of that onion. And if my wife is cutting it up by the way, somebody’s going to start crying. And if you don’t do this right you’re going to start crying.

So here’s number one. Number one is, don’t own anything. Now you might be thinking, “You’re talking about investing in real estate Jim, how can you not own anything?” Well, I don’t mean not own anything. I just mean don’t you personally own anything. Don’t put your personal name on it, deed for any property. It’s the first thing. If somebody goes to do the online tax records, they look up your name, help them to find nothing in there that you own. Now you might be saying, “Well, how can I control assets if I don’t own them in my personal name?”

There’s two ways to that. Number one is entities. You’ll likely want to use an LLC. Now an LLC gives you a personal protection. That’s what the LCC does which is good. Impose your personal name out of the tax records, that’s very, very good. But it’s still pretty easy to find you by going to your local state website and looking up with a registered agent of what your LLC is. They could come after you that way, but that’s better than using your personal name.

Now if you want to go one better I would really recommend that you use trusts. Particularly I like to use land trusts. Why do we like to use land trust? Well first of all, it goes into the name of the land trust online. You can use a different land trust name on every single property. And it’s all going to be controlled with a trustee. So your name will never show up. Every property you own will have a different name and it will be hard to attach all the dots to figure out where your assets are.

The other thing I love about land trust is that the land trust itself is not a recorded document at the courthouse, which makes it very, very hard to figure out who the beneficiary is. So you’re going want to learn about LLCs. You’re going want to learn about land trust. And there’s ways and methods of pulling the two together.

Here’s the other thing, is don’t ever give out your personal information. Don’t let people know where you live. Don’t give them your personal cell phone number. This goes for tenants that you’re signing leases on, contractors you’re signing contractor or agreements on. Instead of using your personal house as the address or your office even, consider just getting a P.O. Box at the post office. Or like I like to do it, the local UPS store works very, very well.

I know of one landlord who is using their personal address on their leases. And wouldn’t you know a tenant showed up on her porch one Sunday night. Don’t let that happen to you. And the way to get around that is by using a P. O. Box. And as far as the phone number, I highly recommend you get a Google Voice number and that’s the number you communicate out of.

Finally, my personal favorite is that just stop using banks. If you really don’t want to give up privacy and let people know everything that you own, you’ve got to get to the point where you don’t rely on banks for your financing. Because what do you do when you go to get a bank loan? You fill out an extensive application, you tell them every asset that you own. You tell how much it’s rented for, how long you’ve owned it, who the financing is with. And they can capture all of that. It’s very easy for them to subpoena that from the bank if they ever need to go after you.

So that’s it. Don’t buy anything in your personal name. Don’t tell anyone where you live and where your personal cellphone number is. And stop using banks. I’m Jim Ingersoll with the REI Classroom. I hope you enjoyed this session today.

Mike: Homevestors, the We Buy Ugly Houses folks, is a franchise system of hundreds of real estate investors that have purchased over 65,000. If you’d like to learn more about the most powerful real estate investing system in existence, whether you’re a pro looking to take your business to the next level or whether you have no experience at all but a burning passion to be successful in real estate investing, please visit flipnerd.com/ugly to learn more.

Please note the views and opinions expressed by the individuals in this program do not necessarily reflect those of flipnerd.com or any of its partners, advertisers or affiliates. Please consult professionals before making any investment or tax decisions as real estate investing can be risky.

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