Whats a good way to protect ur assets when you have multiple properties?

[DeNiroONeal]

Whats a good way to protect ur assets when you have multiple properties?

[BLL]

First, file a homestead for your personal residence.

Second, carry sufficient insurance and follow sound business practices like responding to maintenance issues promptly and documenting all repairs.

Third, make sure the same person/entity doesn't own and manage the property and make sure you don't own any entities or real property personally or through any type of revocable trust.

Fourth, use equity stripping with capitilizing interest with a friendly entity against any long term real estate holdings. Captive insurance companies can be a good choice.

Fifth, put all excess cash into employee benefit programs that are ERISA-qualified.

[Rob in Atlanta]

The key is to 'control' everything, 'own' nothing!

Rob

[DeNiroONeal]

I like that....Own nothing and control everything..lol...Thanks BLL thats the detailed info I'll need...But ..what is equity stripping?

[BLL]

what is equity stripping?

It's using one company to place mortgages on the property owned by another. These are real mortgages where real money changes hands and a real closing takes place. Anything less would be a fraudulent transfer and not respected by the courts.

It's like a regular mortgage except this lender is sympathetic to your position as a debtor and can foreclose if  a creditor gets too close. The property is taken out of the entity, leaving only a shell for the creditor, who has no claim against the lender since the lender does not engage in any type of activity that would generate a liability.

Businesses use this method to collatoralize receivables and protect them from creditors. Property owners can use it to protect future rent as well as equity and even future appreciation if it is structured properly.

[John_in_NC]

what is equity stripping?

It's using one company to place mortgages on the property owned by another. These are real mortgages where real money changes hands and a real closing takes place. Anything less would be a fraudulent transfer and not respected by the courts.

It's like a regular mortgage except this lender is sympathetic to your position as a debtor and can foreclose if  a creditor gets too close. The property is taken out of the entity, leaving only a shell for the creditor, who has no claim against the lender since the lender does not engage in any type of activity that would generate a liability.

Businesses use this method to collatoralize receivables and protect them from creditors. Property owners can use it to protect future rent as well as equity and even future appreciation if it is structured properly.

If you have a lot of equity in a property that you own, why not just go to your local bank and get an equity line of credit as high as possible. In my state, a deed of trust gets filed that effectively "strips" your equity.
Isn't that a lot easier?

[BLL]

If you have a lot of equity in a property that you own, why not just go to your local bank and get an equity line of credit as high as possible. In my state, a deed of trust gets filed that effectively "strips" your equity.
Isn't that a lot easier?

The effort is about the same, but the lender isn't sympathetic to your situation and the loan doesn't protect future appreciation. With equity stripping, the captilaztion of interst protects future appreciation by increasing the amount owed. If a creditor places a lien on the property, the friendly lender forecloses, the judgement lien goes away, and the property is out of reach of the creditor since the debtor no longer owns it. A 3rd party lender isn't going to bother.

You also run into a potential issue where the creditor can take control of the entity or impose such draconian shackles on your business that you decide it's better to settle. How long can you last paying $600/hr to have someone else run your business. There are not considerations with equity stripping.