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Setting Up LLC For Real Estate Investing (Your 1st LLC!)

- Hi, Clint Coons here and in this video,

I am going to discuss the first LLC

you should set up when you're looking

to invest in real estate.

So with that, let's get started.

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- All right, guys, when it comes to setting up

limited liability companies there's a lot

of information out there on the internet

about setting up an LLC in your home state,

what type of LLC you should set up,

Nevada, Delaware, Wyoming, you name it.

So I can see how it can get confusing.

But, here's what I want you to think about.

When you're going to create a business structure,

one of the first things that I always focus on

is keeping my name off a title.

Or off of that business.

Unless I'm willing to be out there,

actively promoting myself,

like ClintCoons.com,

or you know, Anderson Business Advisors,

where I want people to know that I'm associated

with that business entity,

there is no reason why you should have your name

tied to your limited liability company

that is going to own rental real estate.

Recently, I was featured,

I didn't know this at the time,

on a segment on NPR where they were talking about

privacy of limited liability companies.

And in this hour and a half long segment

that did discussing the fact that tenants cannot,

in certain circumstances,

find out who the owner of a limited liability company is

that actually owns the property,

how troubling that is for these tenants

who can't find out this information.

Now, I didn't get quite get the gist of the interview,

or the NPR program,

other than the fact to say that tenants need to know

who the owners of the LLC is,

so that they can, what, harass them?

I mean, if you have a legitimate claim

you can always sue the LLC,

you don't need to know who actually owns it.

But they were making the point that,

yes, we need to know who owns it

and that people, like myself,

they took one of my videos and an audio segment of it

where I discuss using an amenity,

these are the problems that prevent tenants

from finding out who the true owners are,

because people can set up entities anonymously.

Well guess what?

This is exactly why you should do it.

Because you do not want tenants contacting you,

stepping into your life,

creating problems, think on this.

Let's say you had a tenant.

And they're disgruntled with you

because you evicted them,

or you're about to evict them,

or maybe they want a new refrigerator

and you're refusing to do it

because they want the refrigerator with the ice maker

and you say,

you have a perfectly fine working refrigerator right now.

What could they do if they know about you?

Have your personal information?

Well, simple.

They can get on the internet

and just trash your reputation.

What's to stop them?

Nothing.

They can create multiple fake accounts,

start posting fake postings about you

that other people will see,

your friends, your business associates,

future tenants, what could that do to your job?

You think you have any legal recourse against them?

No, you could possibly get a temporary restraining order,

but that's going to be expensive and time-consuming

and may not be granted

because you don't have proof

that they're the ones actually doing it.

So it is for that reason,

when you're thinking about investing in real estate,

I strongly encourage you to create your structures

so that people cannot discover who the actual owner is.

The way I go about doing this is I typically start

with a Wyoming limited liability company.

That is going to be the first LLC you set up.

And the reason why you're going to use Wyoming,

is because Wyoming does not list any information

about the members or managers of that LLC.

Now, the Wyoming LLC should be used for residential

real estate holdings.

I'm about to show you this in just a second.

If you're going to use,

if you're going to be investing in commercial,

multi-family, then I would go with Delaware.

And the reason why I look at these two structures

is because with Delaware

you're dealing with a different type of lender

than you would be in Wyoming,

where you have single family loans.

So, there are different type of loans,

different types of lenders,

and so they look for different things

when it comes to creating these structures.

So, the way we set this up,

to protect your identity so someone cannot discover you,

is you first create your amenity-compliant.

We'll call it that, an amenity-compliant LLC.

This can be in Wyoming, it can be in Delaware.

Let's just go with Wyoming here.

So I set up this Wyoming LLC.

That gives me complete amenity.

So I'm the manager, I'm the member of this LLC

but no one knows that its me

because nothing's reported to the Secretary of State.

Then, when I go to create my,

let's say,

my Texas limited liability company up here,

here's the Texas LLC.

Here's a Washington LLC right here.

Then I'm going to have these LLCs owned by

this one Wyoming LLC.

So when you're creating them,

after you've set up this first base structure,

because this is going to own all

of your limited liability companies.

You don't need to do this one-per-one,

so you have a whole bunch of Wyomings.

Just create one.

It will be the member in all of these.

The information that the Texas Secretary of State's website

will point to this company right here

because that's what we'll going to list

when we file for our Texas LLC.

The name of our Wyoming LLC.

So if a tenant, they're in this Texas property right here,

they're disgruntled because you didn't buy them

that new refrigerator they wanted

that had the ice maker and the water dispenser in it,

and maybe the touch screen.

So they decide, well, I'm going to get back at you.

Well, who are they going to get back at?

The limited liability company?

No, they want to go at you, the owner,

to make your life uncomfortable.

So if they look up the LLC

on the Texas Secretary of State's website,

it's going to point them to Wyoming.

If they look up the Wyoming LLC,

it's going to point them nowhere.

This is how you build out

your real estate investing structure.

Now, this is on the residential side.

If it was a commercial property

and I wanted to build this stuff out,

then this would be Delaware right here

that I'd be setting it up in.

So, keep your business affairs private.

Do not allow people to discover

that you're the owner of these entities.

And a lot of times people say,

well Clint, they're going to know it's me

because I'm managing the properties.

If you're self-managing, don't tell them you're the owner.

I mean, one thing's often said is

that if you're dealing with tenants yourself,

and you're self-managing your properties,

and you're talking to them

and they're disgruntled about the owner,

Well, heck!

you can join them, say you know what,

I think the owner's a real S-O-B myself.

I just manage the properties.

Guy never responds to me.

So now you can kind of be one of them.

And they don't know that you own the property.

So they may look at you differently.

So this is how I go about creating structures,

it's very important,

the first entity you create in building out

your limited liability company structure

for real estate investing

is going to start with an amenity-compliant LLC,

either in Wyoming or Delaware,

based upon the real estate you plan to invest in.

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