Loopholes of Real Estate (NONE)

Loopholes of Real Estate

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This is one of the reasons why we homeschool my daughter, to give her what we believe she should have. You authored a fantastic book called Loopholes of Real Estate. I highly recommend Loopholes of Real Estate to everyone. They should read it at least twice because there is so much in there. Some people have a negative connotation when it comes to the word loophole.

Loopholes are there to your advantage as we discussed in the book. I did some research. Loop meant window and it was a hole in a castle. In a loophole, you could fire an arrow on the people below you. Loopholes are really important for castle fortification strategies for people.

They moved the loopholes, the little narrow slats to the bottom of the castle, and the kids and young adults could slip out of these loopholes. They knew where they were, and they could escape a siege. The word loophole had a great meaning back in the 14th and 15th Centuries.

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It became a word that meant you knew where the escape hatches were. The loophole in the castle is how you can escape. It came into the general language as a way for you to escape a contract ora tax. A good CPA can help you take advantage of the loopholes that are associated with real estate. On the legal side, there are loopholes that we need to close. There are ways that people can get at us if we hold real estate in our individual name. People can get at the real estate and all our personal assets by using the loopholes that close down legal liability by using LLCs and other structures.

We can also invest in real estate to our benefit.

Loopholes Of Real Estate Investing with Garrett Sutton

Loophole for me, when you consider the history of it, is a good thing. One of the things you speak about is knowing when to open and close those loopholes. How does that improve the results of a real estate investor? On the tax side, you want to take advantage of depreciation. You want to be able to write off the value of the building over the 27 or 35 years. You want to close the legal loopholes that are out there. It means though that all of your personal assets are exposed. You cover 53 loopholes, and these are loopholes that real estate investors should consider or even take advantage of.

I found three categories. There are tax strategies, legal strategies and even selection strategies. Can you touch on the difference between good and bad debt? Good debt is using our credit system to borrow money to put money in your pocket.

Good debt would be using a mortgage to acquire an apartment building. You can use s and you can go up to bigger properties. There are all sorts of ways to increase your net worth. The name of the game is to create cashflow. Mortgage rates may be going up, but there are still opportunities out there for people to utilize good debt to their advantage. In every market, people can make money using good debt. There are always deals to be found, you just have to know where to look and how to invest. Why is it dumb not to have asset protection? We live in the most litigious society on Earth.

There are more lawyers and lawsuits in the United States than anywhere else. Your chances are the same whether you buy a ticket or not with the lottery. The second way was through the litigation lottery. They were going to sue someone. Instead of holding real estate in your individual name, you need to hold it in a limited liability entity like the LLC.

We need to take the steps right at the start to protect your assets because we live in this society where attorneys are able to have contingency fees. That gives attorneys an incentive to sue. Knowing that, we have to take steps to protect our assets. Attorneys have a lot of incentive effect. Let us help, we can collect, no risk.

If they do sue, you want to have plenty of insurance. Insurance is the first line of defense. Entities are the second line of defense. If an attorney sues and the insurance is not satisfactory to cover the claim, they are able to get a judgment against you personally. If you hold a duplex and fourplex in your individual name, they have the ability to foreclose upon those assets.

They can sell it for the benefit of not only the victim but the attorney themselves because they are getting a third of those properties. We have to understand that and protect ourselves accordingly. I know readers hear this time and time again. If you get involved in a fraudulent conveyance, you transfer your properties into an LLC, the court can unwind that on the grounds that you were trying to avoid paying a legitimate creditor.

The contingency fee attorney is going to have a tough time, especially if we use the right entities to get at the real estate properties you own in a car wreck situation. I always recommend that you have insurance on your home and auto. An umbrella policy is a good extra measure of protection. On top of the insurance though, because insurance companies have an economic incentive to not settle every claim, they go out of business if they settle every claim, you have to have these other protections in place, including the LLCs for real estate and other assets.

Loopholes Of Real Estate: You want to have all of these things in place. You have one line of defense followed by another line of defense. With the layers come structure. Do you own any real estate? Lying in court is not a good thing. You can be involved in perjury. In our society, there are enough lies in it already. Rockefeller and he did okay. He used entities back in the day.

Before, Teddy Roosevelt, he used a lot of trusts to protect himself.

The concept is the same. We have a homestead exemption. We have other ways to protect your primary residence. Everybody should look into having a homestead to protect the equity in their home. Your assets are protected.

What would you say to people in terms of the best entities to hold real estate? The LLC and the LP are designed to provide asset protection for their owners, especially through the charging order procedure which varies from state to state. California, New York and Georgia are fairly weak. Nevada, Wyoming and Delaware are strong. That is where the depends comes in.

You mentioned LPs or limited partnerships. My understanding is that an LLC is better, but why choose one over the other? At the giant level, the LP requires two entities. A limited partnership is on the title to the real estate.

We have that personal responsibility. No one wants that. To do the LP right, we have to form two entities, the limited partnership itself and another entityto be the general partner. California has a gross receipts tax on LLCs. In some cases, it does make sense, especially in California to use the limited partnership. There are reasons to use the limited partnership. They can make distributions to the kids without the kids demanding that they sell the fourplex, so they can go on tour with the band. The limited partnership works in family situations.

It works in situations where you have a lot of income in the State of California, you can save money with a limited partnership. They have become the most popular entity now in the country. I met with a client who, like many others, is moving to Nevada. InReno, every tenth plate is a California plate. There are so many people moving there. I even looked into Puerto Rico of all places. I like California, but Nancy Pelosi is talking about an exit tax for California for people who leave for other states.

Even though it is completely unconstitutional, just the mention of that has people thinking about moving. People can vote with their feet and invest wherever they want in the country. This is a whole subject in itself. We could spend another episode talking about the taxation and migration in and out of California. It is what it is. Unfortunately, we have to deal with it. In California, you can make money in real estate, but you have to take the step of using California entities and then probably Nevada and Wyoming entities to hold the California entities for better asset protection.

California law, when it comes to asset protection, is the weakest in the country. If you live in California and hold property out of state, you still have to do some extra planning. California has become very difficult on this. There are ways to deal with it. Marco, for your audience in California, we have to do a little bit of extra planning.

By examining the three keys to successful real estate investing - selection, taxation and protection - this book shows what it takes. Paperback , pages. To see what your friends thought of this book, please sign up. To ask other readers questions about Real Estate Loopholes , please sign up. Be the first to ask a question about Real Estate Loopholes. Lists with This Book. This book is not yet featured on Listopia. Jul 08, Craig Kelley rated it it was amazing. I have personally worked with Diane Kennedy and she knows her stuff!

This is a great book for those wishing to pursue real estate investments. Keep in mind that the rules laws change rapidly so some of the info may be a step behind. Apr 03, Hank rated it did not like it. BUT, although he admits his writing is on theory, not technique, he oversimplifies techniques, leverage, and accounting. Kyosaki makes his money selling books, not creating cash flow quadrants with a real estate "house of cards". Dec 12, Greg Kelley rated it did not like it Recommends it for: People I don't like. This book is inane. A complete waste of time.

I read most books while sitting on the crapper and this one was no exception. But I would really like to have that time back. I feel it was wasted. Pun s possibly intended Now, if you hung rapturously on ever word of "Who Moved My Cheese", this book is for you. It is even dumber than WMMC.

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I am not sure you could get much worse or incomplete advice from a Nigerian trying to foist his "inheritance" on you. Oct 31, Jeshua Newman rated it liked it. This work was by far the most difficult reading experience I have had since I began selecting books from a real Estate beginners reading list. It is well enough written, but there is a lot of technical information, which is GOOD but the edition is from December of - which is not so good.

As I read through it I got the sense that some if not much of this stuff has changed, and they even say as much at one point when mentioning that tax code changes were made that year and it was a slow y This work was by far the most difficult reading experience I have had since I began selecting books from a real Estate beginners reading list. As I read through it I got the sense that some if not much of this stuff has changed, and they even say as much at one point when mentioning that tax code changes were made that year and it was a slow year for tax codes changes.

At the time of this writing I am holding my breath for tax time as the most comprehensive tax changes have been forced upon the American people in such a haste that most non-experts and even some experts are hazy on the details surrounding what is coming this April. The book got me thinking and it was eye opening for a beginner, but I give it an average rating because I am sure there is much more relevant information.

Jul 16, Laura rated it it was ok. Some of the ideas given in this book sound "too good to be true".

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Are they legal in your state, under certain conditions, or only for certain people? Is some of the information obsolete? All things that require more specific information, and this book is not going to help you find it, but it might give you some ideas that could help you limit liabilities and make the most of your money if you aspire to become a landlord, real estate investor, etc.

Dec 25, Elgi Carisa rated it it was amazing. Apr 12, Arco Building rated it really liked it.

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