I could use some opinions please, I know I need to discuss this with my Attorney but I would like a few plans to approach him with...
Is my LLC helping me or hindering me?
So far it has only cost me money! I'm feeling there is no legal protection nor financial advantage.
Let me explain...
I followed the advice 6 years ago to hire a real estate attorney.
I have 3 rental houses, 2 on one property, and 1 on an adjoining lot. That's 3 houses on 2 separate deeded lots next to each other.
I'm currently living in the 1 house that has 2 houses on that lot.
My attorney was more than willing to set up my LLC and he charged me $850.00. I realize I could have used on on-line service to set up my LLC for under $200.00, but I was hoping for guidance.
After the LLC was set up I asked my attorney if my properties were protected from my personal holdings.
He said, "No". I'm still personally liable because I own the LLC business. In other words, if the LLC company doesn't have the funds to defend itself, a lawsuit would then go after the owner.
Don't forget to record your "Minutes".
What are minutes?
My attorney explained that in about 30 seconds and I never did get the scope of that.
I bought some books, studied about the minutes and responsibilities of a LLC owner, but what's the use if the LLC doesn't shield my personally?
Second Issue: Financing
The Bank has no problem putting my LLC name on the loan as long as I personally guarantee the loan.
I pay more interest (7%)because it is a business loan.
"The business loan will always have a 5 year balloon", my banker said. I'm due to refinance this year with 15 years to go.
To refinance; the bank is requiring new appraisals and financing fees.
My insurance agent says, "It's not the LLC that protects me, it's my liability insurance policy that does."
My CPA charges extra for the LLC tax forms and wasn't clear in his explanation to me whether I'm benefiting more from having an LLC versus the Sole-Proprietor status.
I will not buy any more rentals.
Of the 3 I have, I live in one, and the other 2 are geared for retirement income.
I'm gearing up to refinance this year, it would fantastic to get the current lower interest rate for principle residence.
I'm feeling the LLC is more costly and more cumbersome than the benefits it supposedly provides.
Any suggestions would be greatly appreciated.
Thank you very much.
Joe from Michigan
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