ok
so I decided that I couldnt stand the thought of my current career path much longer and knew that I needed to do something. So I went out and got my RE licence here in California with the hopes of doing some investing and building something for myself. Being very naive I figured simply that if I had access to the MLS listings, I would have a leg up on 99% of the population. Now it is 9 months later and I still havnt decided on a broker, I do have a very consuming current job. Is it out of the question to tell a broker that you are interested in investments? What did any of you wise people out there do to initiate your education and did you use a traditional agency? I am in San Diego if any mentors are lurking out there.
have a good day and thanks

If my business sole function was real estate investment I would not be licensed for the simple reason that it is not required. Why expose yourself to litigation simply by being a licensed professional. And why pay the costs associated with licensing such as desk fees, commission splits, Assoc fees, E&O insurance, continuing education, etc.

Since you have your license, you may want to supplement your investment endeavor with being a seller/buyer's agent.

It is not out of the question to ask about this with any prospective broker. Just remember that any broker will want to be compensated for hanging your license with them.

Totally disagree...

Today, having a license is a significant advantage to a real estate investor who has or desires the ability to not only invest for themselves but to amplify the earnings ability by having alternative streams of income from real estate investment, including dealing with other investors and significantly easier access to re-sale at retail. Banks do not contact individual investors... they do contact their network of agents/ brokers and these are pre-NOD and Pre Les Pendes.


If you have to worry about the nominal fees for being a RealtorŪ, then you are not much of an investor... a single deal should pay for 10+ years of fees if not more. If your worry is litigation... many easy ways to handle that too. Deal honestly and fairly and use asset protection procedures, such as Land Trust and LLC's in tandem for best protection... these are very simple and any agent should be able to draw up an LT for himself... not for others... because that would be "Practice of Law" but you can easily do your own.. cost about $25.00 or less or LT's and you can generally get an LLC set up for under $500. You only need one LLC place several LT's under it.

You major problem is the Part Time....

Attempting to do Real Estate Part Time is a great step toward never being successful. Attempting to do Investments on a parttime... even for only yourself, places significant limits on your potential and depending on the constraints of the Full Time job... could effectively kill it.

Many Brokers will be very reluctant to bring a newly licensed agent in who says.."I want to do Investment Real Estate"... and if they add "for myself" then the opportunity is generally gone. Even with those Brokers who would hire any warm body with the hopes they would turn a deal or two from their circle of influence... before they joined the 90+% who drop out in 2 years.

Many Brokers including myself would not consider such an individual under any circumstances. We require at least 2+ (prefer 4+) years of traditional real estate with a large number of documented transactions and a large client database.

You need to determine what your goals are and develop a business plan... just wanting to be a part time real estate agent and do investments is not a plan... it is, however a great path to a high potential for disaster not only for yourself but any brokerage your associated with.... develop a plan and see if it is practical.

Great info, as usual, from Realty Check.

Realty Check,

Question for you. You stated:

"You only need one LLC place several LT's under it."

Wouldn't this be a faulty asset protection strategy as the land trusts function only as a privacy measure and not as a tool to mitigate liability like *separate* LLCs would serve (each land trust would have a different LLC as the beneficiary)?

In theory, if you placed 3 apartment buildings each in separate land trusts but had only one LLC as the beneficiary for all 3 of those land trusts, then if one of those buildings/land trusts is slapped with a suit won't all three buildings be fair game for damages since controlling interest to all three buildings lies within the single LLC?

I was under the impression that the court/plaintiff will look at all the income streams that an LLC is receiving (like the cash flow stemming from the 2 other apt buildings in the LLC) when trying to search for assets. Am I correct in thinking that the cash flow streams (if any) are considered assets to the LLC?

Wouldn't it be safer to set up 3 different land trusts each with their own corresponding LLC (3 LLCs) so that they each encapsulate risk for the individual buildings that they hold?

Or, did you mean that you would rely on simply reassigning the beneficiary(s) once a suit is initiated?

I'm confused. Would you be so kind as to help me understand. I'm new to this.

Thanks.

Xeno,
In your example you ask about 3 apartment buildings each in its own land trust all with the same LLC as beneficiary. The way it was explained to me is as the Land Trust is a legal entity it can only be liable for itself as it is its only asset.

Several ways you can set the Land Trust and LLC Asset Protection in play. One is to Not have the LLC as the beneficiary but as the Trustee... you can remain the beneficiary and all the papers go to the LLC "as Trustee of XYX land trust".

As Trustee, the LLC has no liability for the Land Trust... they are only the Trustee... or information and Action element not the beneficial owners of the "personality" which is the only interest the beneficiaries have in the real property contained in the Land Trust. Of course the Trustee can only act on written direction from the beneficiaries.

The other way is to have the LLC as beneficiary but you will still need to have a Trustee for the Land Trust.

Each way has advantages and disadvantages...

How you initially take ownership has a lot to do with how you would best handle it... or use a straw-man to break the traceability for privacy.

Also, in answer to your basic question... no one knows who the benifical interest is in a Land Trust except for the Trustee and the Benifical interest party.

Paul, Realty, thanks for your replies.

I'm going to call a few entities (Bank of NY and Banker's Trust) and ask them how much they charge to set up and maintain a land trust.

Xeno,
If you want land trusst information go to Chicago Title as they were the creators of Land Trusts.