Source: Forbes —
A few blog posts ago, I explained, in shorthand, a formula I use for setting up LLCs in real estate investing. It’s not a universal formula, but it’s a very robust structure that can help most real estate investors create anonymity for their holdings. I promised I would provide more detail in a future article. So here goes. I’m going to show you exactly how to set up LLCs for real estate investing. By knowing this one formula, you will be miles ahead of other investors.
The idea, as I said before, is to create a “smokescreen” that prevents your ownership of properties from being discovered in a search. To do this, you will put your properties into limited liability companies. You will also shield the fact that you are the owner of these LLCs.
The first step is to set up a “holding” LLC. If you know how to set up any LLC (it’s pretty simple), then you know how to set up LLCs for real estate. They’re no different from other LLCs, but you need to take a few precautions.
1. You want to keep your name off the holding LLC.
So, if your name is Fergus Ferguson, then obviously you don’t call your company Fergus Ferguson, LLC. Kind of defeats the purpose, right? But it goes deeper than this. When an LLC is formed, many states collect information on who the manager(s) or member(s) of the LLC are. Your information then becomes searchable by anyone with a smartphone. To avoid this, I recommend establishing an LLC in Wyoming (or Delaware for commercial real estate). Not only does Wyoming keep the manager/members’ names anonymous, but it also offers asset protection and charging order protection—meaning if you are sued personally, they can’t come after the holdings in your LLC.
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