Sam Zell helped found the real estate department at The Wharton School. Zells longtime partner and friend. The pair got their start by purchasing apartments in Ann Arbor, Michigan when both were students at the University of Michigan. Equity Residential, the largest apartment owner in the United States, Equity Office Properties the largest office owner in the country, and Manufactured Home Communities, a mobile home company. In addition Sam has created a number of other public companies, and many private companies. In October 2005 the proposed apartments went on sale; as of May 2006 all properties in the North, East and West Stands had been taken. The apartments are expected to be ready by 2010. Hong Kong and rental yields are expected to be around 5 per cent. Robert Hadfield, managing director of investment property management company Pineflat, was uncertain about the investment potential of Highbury. Projection of apartments, villas, buildings and commercial buildings, service offices and exhibitors services. Information for those interesting on buying, invest or build. Gaining interest of the suppliers and the consumers. Promotion of services for each company. Effective dealing domestically and abroad. Exchanging thoughts, opinions and ideas between businesses, construction companies and estate agents. This trend is becoming more prevalent everyday. Many insurance companies purchase apartment complexes, commercial, retail, and office property as long term investments. They often own property management companies that manage the properties. They have long required that all but residential lessees carry casualty and liability insurance under the terms of their leases. Many are now requiring the same for residential units. Many offer attractively priced policies to their tenants. So far, I am not aware of any residential management company that requires a tenant to purchase insurance from a particular company. The ones that I have seen specify the minimum coverages required, and while they may recommend a particluar insurance company, they will accept coverage by any company the tenant chooses. No bias here just facts.

Property assessment is what the county and state use to assess your property for tax purposes. 100,000 tax assessed value, you will pay 3K per year in property taxes. If you refinance, the lending institution will appraise your house. This does nothing to your property assessed values.

It is only for the lending institution to determine if your home is suitable for lending you money on. This means that if your home can sell for 200,000, they will assess your home for 100,000 and you will pay taxes off of the 100K assessed value.

It depends on the state that you live in.

As I am familiar with California law, I will provide that information. T, the value of the property which the assessor places is based upon the fair market value. The tax value is not an indication that you have any equity at all. It is the value that the assessors office places on the property. If you want to challenge the assessed value, you have a limited time.

Either base year or supplemental taxes. In the county I currently reside, the value is challenged before the Assessment Appeals Board. It may be called something different, but similar, in your county. Go to your assessors office and ask for a copy of the assessment record. Then, ask for an explanation of the record, especially abbreviations and codes. Next, ask for an explanation of the assessed value. In some states, an assessed value is a percentage of market value. In others, it is market value. And in others, it is the market value of the property in the year of the last revaluation. Do not forget to ask about exemptions and tax credits. These can dramatically reduce your taxes. Also, ask when the filing period for a tax abatement begins and ends.

Examine the record to determine if there are any factual errors. There may be an error in the measurement of your house, or there may be an error in the listing of your houses amenities. If there is a factual error, you should request a correction of the error in writing. If needed, file a formal tax abatement. Make sure the other houses are similar in size, age, and location. Identify any variations in treatment of your house and the others.

Typically, this demonstration is made with a formal abatement request. Often, you can get a real estate agent to give you an opinion of value for free, that includes comparable sales and listings. 350, depending on the local appraisal market and the type of appraisal you order. For the most part, when homeowners contest a property tax bill, the point of disagreement is the value the assessor placed on the home. So look at your property tax bill for the value the assessor has placed on your home. In some cases, the amount of the assessed value will be printed directly on the paperwork you get from the local assessor.

On other bills, you have to do a little math to figure out how much assessors estimate your home is worth. If its not explicit, call the assessors office and ask them how to use your bill to calculate your homes value. If the answer is yes, you probably should not appeal. Unless all the homes have been overvalued, or unless your homes condition warrants lowering the value, theres probably not much you can do. But if the value is out of line with similar homes in the area, you may have a case for appeal. Most successful appeals follow one of the following approaches: 1. The assessing office has incorrect information about the characteristics of your property. Your property needs significant repairs. The condition of your home can also affect the value. 25,000 worth of repairs, that will impact the value. In this case, your job will be to document your homes condition and the repairs that are needed. Your property is not valued similarly to comparable homes in the area.

This is a trickier proposition to prove. In some cases, you can get the information online from the assessors Web site.

In others, you may have to go into the assessors office. You can consult a local real estate agent, although he or she will have access to sales prices, not assessed values. You may also have to pay a small fee. You can also hire an appraiser to do the detail work for you. Appraisals often include value figures for several similar houses in the same area. But, an appraiser will do a more professional job.

The better documented and presented the information, the more likely it is that you will achieve a reduction. What you need is comparable: check sq footage, lot size, location, condition and options. Also try to find similar styles. First attempt to resolve this informally with a telephone call to the assessors office.

Its a fair amount of work, but may be worth it in the end if your assessment is substantially overvalued. Assessed value has nothing to due with market value. Assessed value is a value placed on it by the assessors office for prop tax.

100,000 below market value and when the house sells the assessors office adjusts the assessed value to come closer to the market value.

Real estate taxes on the rental property are fully deductible on Schedule E. Debt you incurred for the rental business is deductible on Schedule E regardless of the property used to secure the debt. 20,000 for you borrowed to improve the rental property is business debt, and the interest on this debt is deductible on Schedule E. Using a business property to borrow money for nonbusiness purposes does not give you a deduction for interest. The debt is personal debt, and the interest for 1, 2, and 4 are not deductible.

Real Estate Developers in India. Please sort out companies of Delhi and other areas as per your requirements. Eversendai Consulting Engineers Private Limited Providing design and detailing services for structural steel and reinforced concrete.

Jalaram Associates Providing building developing services. To Z Civil Engineering Solutions Providing building constructions land surveying road works. Uttranchal dealing in sale and purchase of industrial property, factory plots, factory lands, industrial sites, agricultural lands, residential plots and residential houses in Haridwar, Dehradun and Roorkee. Ravi Murgan Constructions Offering apartments with designed colored ceramic tiled flooring, granite cooking platform, ornamental doors etc.

Providing various types of civil construction services. Yamuna Developers Providing services of developing of eco resorts, villas, flats, ownership appartments in resort projects and setting up of resort projects on turnkey basis. Srathy Consultants Providing buiding consultancy services.

Providing construction services for developing residential group housing, independant expandable villas, showroom spaces, business park, commercial complexes, independent duplex houses in Rajasthan.

Address: 207, Windsor Plaza, S. Associates Deals into all kinds of hospitality building, educational campus, sports complexes, religious places etc. Providing building construction and construction projects related services. Anckur Contracts Providing all kinds of civil construction services.

Eden Heavens Eden Havens offers you the privilege of choice.

Plots available in Navi Mumbai and in Goa too. Premier Properties Providing services as a builder. Dhillon Group, Chandigarh Providing building construction services for residential and commercial building.

Mukund Enterprises Providing services as a builder.

Anisha Estate Service Real Estate dealer and consultant, providing houses, appartments, offices, industries in South and Central Delhi. Vasanth Builders Providing services of building construction. Ajay Enterprises Limited Providing services as builders. Alliance Builders and Contractors Ltd. Real estate developers offering services like housing development, township development and commercial complex development in cities like Bareilly and Shahjahanpur. Tallam Construction Builders and developers of residential and commercial complex. Atithi Builders Providing services of house development and commercial space. Properties Providing services related to residencial, industrial, commercial plots, farm houses, flats etc. Kalpak Construction Providing real estate development, building construction and construction contract services. Canti Homes Private Limited Real estate developers offers construction services. We Construct residential flats in and around chennai and sell, we are flat promoters.

Metro Builders Providing Services As Builders To Create The Best Residential And Commercial Buildings. Adunik Consultant Consultant for building material, contractors and builders. ABN Roofs Relocation consultants, providing complete logistics that include outsourcing properties, furniture rentals, movers and packers. Engineers Estate Providing construction and project management consultancy services.

Advance India Projects Limited Providing serivces of building construction and real estate developers. Pioneer Infrastructure Limited Offering real estate developers, residential property consultancy services, project consultants, flats construction and apartments construction services. Properties Provides commercial premises for lease or rent. Banjara Hills Constructions Providing services in counstructing independent houses. Sri Sathya Homes Providing services of engineers and builders.

Vibrant Real Estates Providing fully developed house plots. Sri Sai Associates, New Delhi Dealers of housing flats in various location of East Delhi and NCR. Nav Bharat Estate Agency Providing services of real estate consultancy only in residencial properties in HUDA sector.

Infratech Engineers Providing building and civic ammenities construction and design services. Enterprises, Bhandup Providing civil services. Vox Group of Companies Provide services for real estates. Deep Group Of Companies Providing of all types of real estate developers and construction services. Invest 2 Gain Offering services of construction and sale of farm houses, kothis, plots, residential and commercial land. Landmark Developers Providing services related to building construction. Madhu Constructions Providing services building constrution, builders and civil contractors. Kaushalya Infrastructure Development Corporation Limited Providing housing services.

Raheja Developers Private Limited Providing real estates developing and promoting services. Sri Balaji Constructions Providing services like building constructions and sales. Providing services like sale and purchase of residential and commercial properties. Castle Rock Builders And Developers Deals in residential layouts, residential appartments, commercial building etc. Private Limited Property centre in Coimbatore provides residential flats, appartments and villas at affordable rates and arrange loans from housing finance company. Danial Enterprises Deals in real estate business specially free hold properties, building maintenance etc. Manuelsons Century Wood Crafts Provide real estate services that includes construction and housing projects such as Green Field Project in Puzhakkal, Willow Woods in Trichur and Serene Enclave in Panangad. Gandhi Builders Private Limited Providing real estate services. Electronic Services Private Limited We are engaged in the field of supply, installation and commissioning in building solutions. Manpasand Builders Private Limited Providing various types of real estate developing services. Srivari Property Developers Providing services like property development, plantations to entertainment, finance and leasing services. Deep Realtors Private Limited TrustSeal Engaged in offering services of real estate consultancy services, commercial real consultancy services, residential real consultancy services, building construction services and renovation services. Agarwals Real Estate Developers Providing real estate development services like apartments construction, hotels construction, farm houses development services, shopping complexes construction. Also providing commercial real estate agents and industrial real estate consultants.

Also offering cousultancy services of sale and purchase of apartments and plots. Boomerang Properties Builder Offering real estate developers, residential property consultancy services, commercial property consultancy services, residential bungalows construction, flats construction, apartments construction and other real estate development services.

Company Offering real estate developing services, residential property dealing, commercial property dealing, industrial property dealing for MNCs, shopping malls and residential houses in Delhi, NCR, Agra, Lucknow, Kolkata and Mumbai. Kanu Estates, Delhi Engaged in building and developing of shopping malls, residential, lands, agricultural and Industrial lands. Also offering sale and purchase of residential and commercial properties. Vedanta Consultants Offering services as property consultant for residential bungalows, farmhouses along with real state consultancy, industrial real estate consultancy and commercial real estate consultancy. Atharva Developes Real estate agents in India offering sale, purchase, rental services for commercial buildings, residential buildings including shopping malls, site selection, industrial plots and residential plots. Sunny Real Estate Consultants Real estate developers providing customized solutions in real estate development, investment and asset management. Merchandise Pvt Ltd Providing real estate developers, real estate consultants, real estate agents, property dealers, residential property dealers, investment consultants, colonizer services, property builders, property promoters in Delhi and NCR. Prithvi Estates Residential builders offering services of furnished apartments, offices, luxurious residential complexes in gurgaon.

Welldone Estate Projects Private Limited Property builders and real estate developers. Residential apartment and residential home developers offering royal mansions, luxurious appartments, penthouses, luxurious villas, residential appartements, luxurious houses, luxury residential 2 bedroom flats, 3 bedroom flats and 4 bedroom flats. 1, Friend Colony Industrial Area, G. Jain Estates Real estate agents offering consultancy services for commercial, industrial and IT enabled accommodations at mumbai along with residential property. Ltd Offering residential construction services, industrial construction services, building construction services.

Dutta and Associates Provide design and engineering consultant services in the domain of commercial complex , bridges, housing complexes, Hospitals, multi storeyed buidings, industrial structures, auditoriams and multiplexes. Associates And Company Real estate consultants offering real estate development services, commercial building contractors and residential building constructors. Manuelsons, Kerala Real estate agents engaged in sale, purchase, rent of commercial properties and residential properties including hospitals, schools, private villas and residential apartments. Halwasiya Developments Private Limited Real estate developers offering services like general construction services, civil construction services, building maintenance and external development works. Our Builders Deals into construction of flats, commercial complexes, commercial land development etc.

Consultants Real Estate Consultants Delhi offering buying, selling, renting of commercial property, residential property, residential farm land, commercial farm land, farm houses and Industrial land in Delhi, Gurgaon, Noida, Ghaziabad. Civil contractors engaged in providing demolition and dismantling of buildings and urban structures like office partitions, water tanks, smoke stacks, radio towers, industrial structures, rock removal, etc. Man Mohan Vaidya Properties Pvt. Arrputharaj Associates Builders and vaastu consultants from Coimbatore offering services as residential builders and architectural building consultants in India. Single storey with 2 bedroom, attached bath, living room, dining room, kitchen. Infrastructure includes facilities like phone system, cable TV, water sports besides basic essentials.

Mapsko Builder Pvt Ltd Offering services related to builders property. Civil engineering contractors company undertakes subcontracts from leading international companies for civil, finishing works, plumbing, HVAC, mechanical and electrical jobs. Om Properties Offering real estate consultancy, residential property and realtor services in Gurgaon for sale and purchase of residential flats. Also offer investment consultancy services. Baba Enterprises, Chennai Offering sevices for buying and selling of residential property, commercial property, farm land, residential plot, residential flats and beach house etc. Parsvnath Developers Limited Acts as builders promoters and real estate developers.

Subhadra Properties Private Limited Providing services of agricultural lands, bunglow plots, farmhouse plots in and around nashik, maharashtra. Jainsons Properties Dealers of residential building, commercial building and farm houses.

Suham Steel Traders Providing home builder services. Tachukdi Provides real estate and property dealers services. NLM Associates Providing services of real estate developers of prime residential, commercial and industrial areas in Mumbai. Address: D Block, Wankhede Stadium, D. Som Datt Builders Limited Providing building and construction services. International Land Development Private Limited Providing services related to real estate business. Prashant Enterprise Providing building and real estate developers. Pushpa Real Estate Providing real estate services like buying, selling and rental of property.

Greater Noida Industrial Development Authority Industrial development authority selling land for industrial, commercial, institutional and residential purposes. PCES Private Limited Providing consultancy services in the field of civil engineering, and survey work. Khandelwal Realty Private Limited Providing real estate sale, purchase, lease, commercial and residential, serviced apartments, short lets, property management agents, builders and developers services. Chembur Builders Provides Real estate Properties on Rent, Lease, Sale For Residential, Commercial And Industrial Use. Prem Construction Providing all kinds of civil works services, building elivation work services etc. Technical Services Private Limited Provides services of real estate developers. Providing civil construction based services such as road construction services and building construction services. Address: 116, Ramkrishna Seva Mandir, Near Police Station, V.

Indus Valley Promoters Limited Builder and real estate developers that construct residential and commercial complexes in Meerut and NCR of India. Complexes are architecturally perfect and vastu friendly. Properties Providing services of residential, commercial, industrial and agricultural properties for sale, purchase and rent. Prestige Estates Projects Private Limited Providing estate projects related services. Kapur Auto Finance Purchase Sale of Bunglows, Farmhouses , Flats in and around JAIPUR Address: 12 Park Street, M. Buildway Group Buildway stands for Reputation, Goodwill and Customer Satisfication in Building Construction, Developers, Engineers, Plumbers, Contractors, Real Estate and Promoters. New India Constructions Providing construction services. Nikhil Construction Company Private Limited Providing services of real estate developement, property building and building construction. Associates Providing services as a builder contractors and property dealer. Asian Estate Agents Provides real estate promoting and developing services.

Alpmit Engineers Private Limited Engaged into different types of construction works like bridge construction, road construction, building construction and road maintenance. Rohan Builders And Developers Private Limited Providing services of constructing residential building and selling it to the people.

Muthreja Realtors Providing services for rent, lease, sale of flats, bungalows, shops, showrooms, industrial units etc.

Aaditya Facilitators Private Limited Providing real estate services. Prithvi Complex Providing services related to builders and developers. 8, Akshay Complex, Kalher Village Tal. Meghana Homes Private Limited Providing services of building construction and real estate development. Friendz Construction Providing services related to buildings and other properties.

Srilaxmi Real Estates Providing services of real estates. Builders Private Limited Providing real estate developes and promoters services.

Kingsway Consultants Offering consultancy services in architectural and structural design, interior design, industrial projects, property development, valuation of immovable property, civil engineering, landscaping, rehabilitation and repair of buildings. Lokhandwala Builders Providing servies of apartments, penthouses, buildings available in Bombay and India. Developer Private Limited Providing plots, houses and flats services. Company Providing construction services like irrigation, canals, dams, earthworks, roads etc. Company Limited, Kolkata Trading, selling, investment, owning and managing real estate. Associates Providing services of builders, architects, engineers and contractors in bangalore. Real Estates Providing services in building constructions.

Sri Satya Sai Constructions Provide Services like property development, property builder and project management. Billa Enterprises Providing civil constructions and civil contractor services. Srila Builders Private Limited Providing builders and real estate services. Architects Studio Providing all kinds of architect consultancy services. Saumya Construction Private Limited Provide services related to builders.

Gayathris Consultant Realtor Providing services related to all residential and commercial property requirement, buying, selling, rentals in Chennai and Bangalore. Address: C3, 44 Habibullah Road, T. Providing services of building construction like residential buildings construction and commercial building construction services. Construction Solutions Providing services as real estate consultant, real estate property, real estate consultancy for residential, industrial, building and commercial properties. Salarpuria Providing services as real property developers. State Industrial Corporation Limited Providing services of land and infrastructure. Property developers offering real estate development and consultancy services, office construction services, turnkey design services, property consultancy, commercial building design, office fit outs and interior design services. Purplespace Network Solutions Private Limited Provides Indian Design And Building Industry Community Services.

Builders Private Limited Providing construction services.

Address: 501, Mercantile House, K. Group Of Companies Providing all types of developing services like real estate, shopping malls, multiplex entertainment, residential apartments and townships etc. The first step in creating the Family Limited Partnership is the preparation and filing of the Certificate of Limited Partnership with the Secretary of State. The form asks for the name of the limited partnership. Any family member residing in the state can be designated as the agent. There are also companies that will, for a modest fee, act as the designated agent for these purposes. The form also asks for the names and addresses of all general partners of the partnership.

The names of the limited partners are not required. Since this document is a matter of public record, the names of the general partners will be publicly available but not the names of the limited partners. At this point, the partnership will be legally formed. You should request that a certified copy of the Certificate of Limited Partnership be returned to you, and your copy should be stamped with the filing date.

The Partnership Agreement Concurrently with the filing of the Certificate of Limited Partnership, a written partnership agreement must be prepared. This is the document that governs the affairs of the partnership. When creating a Family Limited Partnership for estate planning and asset protection purposes, the partnership agreement must also contain certain key provisions designed to accomplish your objectives. Husband and Wife, as general partners, always maintain absolute control over the assets of the partnership.

These provisions are unique and essential to a properly structured Family Limited Partnership. Overview In making the decision about funding the partnership, it is important that you understand the distinction between Safe Assets and Dangerous Assets. Safe Assets are those which do not, by themselves, produce a high degree of lawsuit risk. For instance, if you own investment securities such as stocks, bonds, or mutual funds, it is unlikely that these assets will cause you to be sued. Mere ownership of investment assets, without some active involvement in the underlying business, would probably not cause a significant degree of lawsuit exposure. Dangerous Assets, on the other hand, are those which, by their nature, create a substantial risk of liability. These are generally active business type assets, rental real estate, or motor vehicle ownership, any of which may cause you to be sued. Safe Assets and Dangerous Assets is that you do not wish to have the FLP incur liability because of its ownership of a Dangerous Asset. This is exactly the situation you are trying to avoid.

Dangerous Assets must either be left outside of the partnership or must be placed in one or more separate entities. Dangerous Assets must be isolated from each other and from Safe Assets, in order to avoid contaminating the Safe Assets. Dangerous Assets An example of a Dangerous Asset is an apartment building. The liability potential of apartment houses is particularly high. Although liability insurance coverage is usually available, the amount of coverage may not be sufficient. The potential liability for such a tragedy could easily reach into the millions of dollars, exceeding by far the amount of your insurance coverage. Apartment owners can also be held responsible for the acts of the resident managers.

Acts such as these may not be covered under your standard insurance coverage. Instead, the best approach for a Dangerous Asset such as an apartment building is to transfer that property to its own separate entity. Generally the Limited Liability Company is the proper way to hold Dangerous Assets. Since no individual member of an LLC can be sued for an LLC related obligation, the liability associated with the Dangerous Asset can be contained and insulated in the LLC.

If a number of Dangerous Assets are owned, each should be placed in a separate entity. LLCs for a client, each holding one apartment building. If a disaster occurred, only the LLC which owned that property would be sued. The other properties and family assets were safely insulated and shielded from liability under this arrangement. Some types of commercial real estate may also constitute Dangerous Assets. His medical practice and the property were both Dangerous Assets and a liability produced by either would jeopardize the other. For example, a problem arising from the building would produce a claim against the equipment, accounts receivable, and cash in the corporation. The office building should have been separated from the medical practice by holding it in a separate LLC. Dangerous Assets must be kept separate from each other asset. We will discuss details about the use and operation of the LLC. Safe Assets Safe Assets with a low probability of creating lawsuit liability can be maintained in a single Family Limited Partnership. The first problem concerns the availability of the income tax deduction for home mortgage interest. Based upon the language of the statute, the deduction for mortgage interest would, therefore, not seem to be adversely affected by a transfer into the Family Limited Partnership. However, until the law on this issue has been conclusively decided you should not risk the consequences of a disallowance of your mortgage interest deduction. 500,000 of the gain from the sale of your home. It is likely that a transfer of your residence into the FLP would cause you to lose this tax advantage. For these reasons, we do not recommend using the FLP to hold the family residence. An alternative is to use a specially designed trust to own the home. All of the tax benefits will be preserved and the highest level of protection can be maintained. Bank and Brokerage Accounts These types of accounts do not create any potential liability and can be transferred into the Family Limited Partnership. In order to open these accounts in the name of the partnership, you will present the financial institution with a certified copy of the Certificate of Limited Partnership. The institution will also require the Taxpayer Identification Number issued to the partnership by the Internal Revenue Service. Interest in Other Entities The Family Limited Partnership is an excellent vehicle for holding interests in other business entities. The reason that we mention these other business entities is that the Family Limited Partnership must not ever be engaged in any business activities.

You do not want the partnership to buy or sell property or goods or to enter into contracts. If the partnership does business, then the partnership can get sued. And if the partnership gets sued and loses, all of the assets that it holds can be lost. Interest in Other Entities The Family Limited Partnership is an excellent vehicle for holding interests in other business entities. The reason that we mention these other business entities is that the Family Limited Partnership must not ever be engaged in any business activities. You do not want the partnership to buy or sell property or goods or to enter into contracts. If the partnership does business, then the partnership can get sued. And if the partnership gets sued and loses, all of the assets that it holds can be lost. Case Example For example, a client of ours entered into a contract to purchase a shopping center. Previously, we had set up a Family Limited Partnership for him. The seller sued the partnership because the partnership was the named party to the contract. This transaction should not have been handled in this manner. The proper way to conduct this type of business activity is through a separate LLC or partnership arrangement. By using the proper planning techniques, potential liability can be significantly reduced and valuable personal assets can be protected from a dangerous lawsuit. This example illustrates the necessity for conducting business activities through an entity other than the Family Limited Partnership so that family assets are not exposed to the risk of liability. The proper role of the Family Limited Partnership in this context is to hold the interests in the business entities that are themselves subject to risk.

The FLP can hold these interests, providing asset protection and estate planning advantages in a single integrated package. Summary The Family Limited Partnership offers a unique capability to realize a variety of planning goals.

Assets held in the FLP are effectively shielded from potential claims. Income taxes can be shifted to lower bracket family members or entities such as corporations and trusts to take advantage of deferral and savings techniques.

Estate taxes on accumulated wealth and future appreciation can be minimized or eliminated by gifting discounted interests in the FLP to children or trusts established for their benefit. The FLP provides a convenient and flexible format as the cornerstone of your overall plan. In the succeeding sections we will see how Limited Liability Companies and trusts can provide additional opportunities to create asset protection and tax savings strategies. The LLC is the most versatile and convenient strategy for owning rental property, insulating Dangerous Assets, operating a business, and achieving an excellent level of financial privacy. The LLC is a relatively new legal entity created by statute and recognized in all fifty states. The adoption of the LLC format began in Wyoming and Florida in the 1970s with approval in most other states only within the last ten years. The purpose of the legislation is to allow individuals to create a legal entity that avoids many of the tax and business problems inherent in the corporate and partnership structure. More particularly, the LLC provides the protection from liability of a corporation without the formalities of corporate minutes, bylaws, directors, and shareholders. LLC law specifically bars a lawsuit against a member for the liabilities of the LLC. That is an important distinction which you should understand. LLC legislation was to change this result by clearly stating that the members and managers of the LLC could not be named in a lawsuit against the company. The LLC is also convenient to maintain.

The owners are permitted to adopt flexible rules regarding the administration and operation of the business. For tax purposes, it is treated like a partnership. That means the LLC itself pays no income tax. All of the income and deductions flow through directly to the members and is reported on their personal tax returns.

The LLC is formed by filing Articles of Organization with the Secretary of States office. Unlike the FLP, which requires the names of the general partners, the disclosure of the names of the principals can be avoided. The name of either the member or the manager must be provided in the articles.

Also, many states, including Nevada and Delaware, permit a single member LLC to be formed.

We will see that these provisions open the door for a variety of financial privacy strategies. Anonymous ownership of financial accounts, business interests, and real estate can be achieved with an LLC as an important component of the plan. The bad news, for physicians and some other professionals, is that state law generally does not allow these practices to be operated as an LLC. Although the LLC may be useful in protecting accumulated assets from lawsuits, it will not insulate the individual from the liability associated with a medical practice.

Inside and Outside Liability To understand the benefits available from the LLC, lets look at a typical example.

We know that holding the property, as they do now, exposes them to great danger. Ownership of rental property creates more uncontrolled liability and lawsuit risk than any other business or profession we have seen. And because this potential liability usually cannot be covered by insurance, a single unpredictable event, a mistake, or just bad luck can wipe out everything built up over the years. John and Mary own to potential liabilities from the property. John and Mary need to be protected from inside liability. John or Mary from a matter not related to the building exposes the equity in the apartment property to seizure in satisfaction of that claim. We call this type of liability outside liability.

John and Marys interest in the property must be protected from outside liability. If one of them is involved in an auto accident causing serious injury, they do not want to lose the property because of this outside liability. Clearly, owning the apartment building in the current manner is not sound business planning. LLC Versus Corporation John and Mary could transfer the property to a corporation.

Each would own 50 percent of the stock in the company. John and Marys personal assets to danger. The problem is that this protection against liability is only available if all of the corporate formalities are carefully followed. Since most people do not maintain proper corporate records and documentation, corporations often do not provide the intended level of protection.

Further, corporations are subject to complex tax rules, which can cause severe and unintended consequences. John or Mary unrelated to the property. For these reasons, it is generally not advisable to hold investment real estate in a corporation. LLC Versus Limited Partnership If John and Mary form a limited partnership to hold the property, one or both of them will serve as general partner. The major problem with the limited partnership format is this unlimited liability of the general partner. John or Mary for an outside liability would be limited to a charging order, which would not affect the property in the partnership. By forming an LLC, John and Mary can accomplish all of their objectives. Inside Liability Protection A member of an LLC is not responsible for claims or judgments against the company.

When we are dealing with a rental property or an active business, the potential liability associated with the business is a primary concern. But as we have stated, the law specifically provides that the members of the LLC cannot be sued.

In our previous case study, John and Mary transfer their apartment building to an LLC. If a tenant is injured in an accident, John and Mary, as members of the company, would be protected from any claim relating to the property. Outside Liability Protection Property held in an LLC cannot be seized by a creditor of a member. If there is a judgment or claim against John or Mary, the creditor cannot reach the property held in the LLC. As is the case with the Family Limited Partnership, assets of the LLC are protected from potential claims against a member. The creditor is limited to the ineffective charging order remedy. LLC is only permitted to take whatever actual cash distributions are made by the company. The creditor cannot force a distribution or demand any portion of the assets of the company. No Formalities An LLC is not required to maintain formal minutes and resolutions. Record keeping requirements can be minimized without a threat that the members will be sued individually for a liability of the company.

Contrast this treatment with that of a corporation.

If the proper formalities are not followed, the corporate protection will be pierced and the owners will have liability for company obligations. Im just going off the top of my head here without looking anything up, so just use my answer as a guide and not fact. Land, as you know, is not depreciable.

But it should be listed as a separate component of the sale. The building is depreciable, but will also be under an additional code section, 1250. The general rule starts with section 1231 property. Then, depending on what it is, it might ALSO be 1245 property or 1250 property. Both 1245 and 1250 pretty much say this: When you sell the asset, the amount over adjusted basis, up to the extent of depreciation taken, is ordinary gain. Lets say I sold it for 12,000. 9,000 of my gain would be ordinary and 3,000 capital gains. There is some special additional tax on the gain or special rate.

But the losses are ordinary, thankfully. And I feel like Im getting off track here, but Im trying. And perhaps this is where saying more info is needed might help.

Mary can prove that she wasnt going to improve anything, then there might be support for the claim that it is a capital asset and the gains are capital. In short, you will want to check out code section 1237 for reference too although it doesnt exactly fit your problem. And last but not least, Ill clog this answer with an Explanation nabbed from my own stuff. Good luck on your research and forgive me for such a lengthy answer. Usually I hate stuffed answers. Real property produces capital gain or loss on its sale or exchange if its a capital asset. The factual question of whether real property was so held gave rise to intensive litigation.

Cases decided under Code Sec. 1231 are covered as part of the question of what property is used in a business.

Decisions delineating property that is a capital asset are covered in this subdivision. The special rules of Code Sec. 1237 , allow taxpayers other than C corporations to obtain limited capital gain as to property subdivided for sale under certain circumstances without reference to this question. Whether real property is held primarily for sale to customers in the ordinary course of the taxpayers business is a factual question determined by the circumstances of each case. TAX TIP: In some cases, the taxpayer may hold some property primarily for investment and other property primarily for sale to customers. If that is so, great care should be taken to set up separate accounts for each property.

In short, if the taxpayer wants to obtain capital gain on a sale, he must be prepared to prove that he was holding the specific property primarily for investment. There are many, many specialties.

This is referred to as rental income. You do have to claim the income, but you can also deduct the expenses that you incurred in taking care of the property. Robert Kiyosaki if youre serious about it. Since you know how to appraise it, you could buy rental real estate properties and start charging rent. That is, unless you want a job or something, but you probably wont get as much money as you would in renting. If youre tired of real estate, I would suggest starting a company in something that you do like. In the real world, those who get rich arent usually the ones with college degrees and jobs, anyway.

IN your pocket, its a liability.

Its an asset on the BANKs balance sheet. Figure that youll basically pay double for the loan. If you can pay it off in 20 years vs 30, youll save thousands in interest. If you can make the mortgage payments, and you have a lot of cc debt, it may make more sense to pay off the higher interest rate debt first. 2000 to 2002 and started renting it after that and still do. Luckily, I am handy and can do alot of the repairs myself. Real Estate Developers in India.

Please sort out companies of Delhi and other areas as per your requirements.

Eversendai Consulting Engineers Private Limited Providing design and detailing services for structural steel and reinforced concrete. Jalaram Associates Providing building developing services. To Z Civil Engineering Solutions Providing building constructions land surveying road works. Uttranchal dealing in sale and purchase of industrial property, factory plots, factory lands, industrial sites, agricultural lands, residential plots and residential houses in Haridwar, Dehradun and Roorkee.

Ravi Murgan Constructions Offering apartments with designed colored ceramic tiled flooring, granite cooking platform, ornamental doors etc. Providing various types of civil construction services. Yamuna Developers Providing services of developing of eco resorts, villas, flats, ownership appartments in resort projects and setting up of resort projects on turnkey basis. Srathy Consultants Providing buiding consultancy services. Providing construction services for developing residential group housing, independant expandable villas, showroom spaces, business park, commercial complexes, independent duplex houses in Rajasthan. Address: 207, Windsor Plaza, S. Associates Deals into all kinds of hospitality building, educational campus, sports complexes, religious places etc. Providing building construction and construction projects related services. Anckur Contracts Providing all kinds of civil construction services. Eden Heavens Eden Havens offers you the privilege of choice. Plots available in Navi Mumbai and in Goa too. Premier Properties Providing services as a builder.

Dhillon Group, Chandigarh Providing building construction services for residential and commercial building. Mukund Enterprises Providing services as a builder. Anisha Estate Service Real Estate dealer and consultant, providing houses, appartments, offices, industries in South and Central Delhi.

Vasanth Builders Providing services of building construction.

Ajay Enterprises Limited Providing services as builders. Alliance Builders and Contractors Ltd. Real estate developers offering services like housing development, township development and commercial complex development in cities like Bareilly and Shahjahanpur. Tallam Construction Builders and developers of residential and commercial complex. Atithi Builders Providing services of house development and commercial space. Properties Providing services related to residencial, industrial, commercial plots, farm houses, flats etc. Kalpak Construction Providing real estate development, building construction and construction contract services. Canti Homes Private Limited Real estate developers offers construction services. We Construct residential flats in and around chennai and sell, we are flat promoters.

Metro Builders Providing Services As Builders To Create The Best Residential And Commercial Buildings. Adunik Consultant Consultant for building material, contractors and builders. ABN Roofs Relocation consultants, providing complete logistics that include outsourcing properties, furniture rentals, movers and packers.

Engineers Estate Providing construction and project management consultancy services. Advance India Projects Limited Providing serivces of building construction and real estate developers. Pioneer Infrastructure Limited Offering real estate developers, residential property consultancy services, project consultants, flats construction and apartments construction services. Properties Provides commercial premises for lease or rent. Banjara Hills Constructions Providing services in counstructing independent houses. Sri Sathya Homes Providing services of engineers and builders. Vibrant Real Estates Providing fully developed house plots.

Good luck with your venture. Congratulations on your decision to purchase a rental property. Now comes the hard part: finding the perfect property that will generate sufficient income, while requiring a minimum of upkeep and maintenance. One way to find the right property is to have a due diligence list. Here are a few things to consider as you search for an appropriate property. Although you may find a diamond in the rough, if the price of a property seems too good to be true, it probably is.

Factor in the cost of necessary repairs and renovations before you make a decision. In many cases, its cheaper to purchase a better house than it is to fix up an existing mess.

Location is one of the primary concerns for any property. If it is located on a busy street, it will be harder to attract tenants who prefer peace and quiet.

This can greatly reduce its overall appeal, no matter how you maintain it. If the property has been a rental in the past and has garnered a bad reputation, it can be tough to dispel.

It takes time to change the opinions of local residents. Determine whether you have the time and marketing skills to change the propertys reputation. You will need to honor any current lease agreements with your exisitng tenants. You wont be allowed to raise their rent until their leases expire, and you may be subject to state laws dictating how much you can increase their rent. State laws will also typically limit how much you can raise the rent for unoccupied property. If you are unable to repair a property or maintain it, youll probably need to hire a professional, such as a property manager. This will cut into your profits. However, it will be beneficial in that you wont always have to be present to handle any problems that arise. New landlords should be very careful about buying property they cant oversee themselves. Even if you do hire a property manager, you should be able to visit the property on a regular basis. Even if the property youre considering is in great condition, take a look at the surrounding dwellings. This can greatly affect your ability to attract new tenants, and may result in a high turnover rate if the area has a bad reputation.

You may also need to provide security for a property, if the neighborhood has a history of problems. Research the neighborhoods crime statistics as well as the turnover rate for other properties. It may take some time to fill the property, leaving you with a shortfall. Also take into account other expenses, such as repairs and general maintenance.

If the numbers dont add up, keep looking. First decide what type of investment you are looking for. Being a landlord is another way, it is hard too but more long term. You will need to study landlord tenant laws then buy the rental properties and find tenants. Selecting the right property is very important as is screening tenants a bad buy or bad tenant can bankrupt most first timers. Another way is commercial real estate like mini warehouses. 100,000 a year lifestyle, you might find it difficult to maintain your standard of living past your 70s and 80s with just 2 million in the bank.

IRA or 401K which offers the tax benefits but allows you to directly manage how those funds are invested, including investing the money in a business or real estate. Which can be in conflict with IRS rules if not done properly. Real estate, whether through your IRA or otherwise is probably your best alternative. Not necessarily buying rental properties and managing them on your own. Prices are low but will probably be stagnant in some areas for some time. Again, this is the time to buy if you can afford to hold them long term. 20 well purchased homes would certainly add to your net worth in 15 years not only in equity but added income. Multiply that by 10, 15 or more and that would get you at least half way there. You might consider commercial properties instead.

Either the actual buildings or just the ground leases. Generally a lot less headaches with longer term tenants. The downside: harder to replace if you lose a tenant. 10K stake or more, I would also recommend forex trading which by the way is over a 2 trillion dollar daily market.

Very difficult to manage, except I found a great software program that takes all of the guesswork out of it.

At the very least you will learn a little about that alternative to the stock market. You can actually pick your own interest rate. Of course the higher the return, the greater the risk but there are failsafes in place. You have a TON of options. Ive never done a credit check on any of my tenants.

Just drive around the city in the medium part of town. Stay away from the really bad parts of town, but dont look in the ritzy areas either.

Find a house with a for rent sign outside of it. If it looks like a company owns the sign, then keep driving until you find a plain looking sign. This property will be owned by an individual. DONT list your friends as unemployed.

Under references, list your friends. Even if your friends are 16 years old, list them anyway, and lie about thier ages. Chances are, the owner wont call them anyway. It shouldnt be a huge deal to get a place in a matter of days, just have confidence. Ask intelligent questions when you look at the place.

Dont ask about throwing parties, or loud noise, or anything else that will give the owner reason to be suspicious.

Once you are a legal adult, its a real pain to get one. The difference is that the tenant also has the GUARANTEED right or option to buy the property at an agreed upon price sometime during the rental period.

DOES NOT HAVE TO buy it. The landlord MUST SELL the property to the tenant at the agreed upon price, if the tenant so chooses. Own allows you to move into your own house now, with a relatively small down payment, even if you have credit problems that would keep you from buying a house. Once you are in the house, we work with you to improve your credit over the next year or two, so you can easily qualify for a good loan.

You can paint and decorate it to suit your tastes and make improvements you would never think of doing with a home you are just renting. The tenants and landlord sign a Lease Agreement and an Option To Purchase Agreement, each about 2 pages long. Lease Agreement in 2 ways: There is an option fee paid to the landlord for the guaranteed, exclusive right to purchase the property during the lease term. This is similar to the down payment required on most home loans, but is generally less money. 7,000, depending on the home and your credit history. All this means is that you will fix the leaky toilet, change the light bulbs, etc. If the furnace or roof needs replacing, the landlord is responsible for those major repairs.

There is a certified property manager designation offered by the Insitute for Real Estate Management. You do have to obtain a real estate license prior to getting this designation. Wikipedia says about it: Certified Property Manager The designation is awarded by the Institute of Real Estate Management to the top professionals in the real estate management industry. The Institute offers the only comprehensive program exclusively developed for property and asset managers working with large portfolios of all property types.

The CPM designation is considered to be the industrys premier real estate management credential. There are over 8,600 professional real estate managers who hold this distinguished designation worldwide. CPM members manage approximately 900 billion dollars in real estate assets. Also, many Universities, community colleges and business schools offer courses in property management.

Indiana and took a graduate course in property management as an elective. There are numerous courses out there that can help you. Some times local investors are competitors so find one that isnt in your city if possible. Or maybe attend a local real estate investment club for net working. Rules in books in library as well as your state statute books that are in reference in most libraries as well. Having a team with a title company pro a , realtor, cpa, attorney,appraisers all can help.

Be very careful while these people are professionals they may not have your best interest in mind as they usually only make money when you buy real estate. Ron Legrand and Dave Lindahl and Carlton Sheets.

IREM Institute of Real Estate Management. They have a nice course on real estate management. To become a CPM Certified Property Manager. While non of these designators are nessesary to become a good investor they certainly are schooling to help the people that would like to know more about this industry. Well this is if you dont have time for a good degree in real estate from Wharton college lol. However if you are like me and didnt have time to get to a nice school like that then school of hard knocks is another route. Look for professional real estate journals as well. National Association of Real Estate Boards.

As far as becoming a real estate sales person is concerned: Each state is different. In some states you can simply study for and take a state exam. In other states a sales person must be sponsored by a licensed real estate broker. The person who wants to be a sales person takes classes, accumulates credits, takes an exam. In other states it is imperative for a licensed sales person to continue learning about the real estate business, accumulating additional credits and taking additional tests. The opportunities are virtually endless.

After a period of time AND with a proven track record, the sales person studies for, takes classes for and takes a state prepared exam. If this person met the employers requirements there probably are no legal prohibitions. If you believe that this person poses a threat to your personal safety or the safety of your domicile, you may be able to get out of your lease. Pros and Cons for having one. They can also check on your property when there is a severe storm. Most will take care of basic maintance items, change the furnace filters, smoke detector batteries.

You have the peace of mind knowing that someone is there looking after your place, in your absence. Dont be afraid to ask questions when you meet with them, and make sure you have it in writing as to what they will do. You will also want to look into getting an H06 insurance policy to protect yourself and your investment.

First the most important numbers must be from current tax year. Validate these from either the propertys schedule C or have the owners accountant sign off on the numbers. You dont want falsified numbers. You want current expenses, vacancies and rent roll. Last years and any speculative numbers are irrelevant.

Find more info at book stores and libraries. Locate a good attorney and accountant, making sure they know all tax codes, local, state and federal laws, and are assisting other investors such as you.

There will also be investment clubs and groups that you can find in your area that are very willing to help and will probably even know the property. This may be your best source of info. It may be best to stay away from the top residential home sellers in your area. Most dont know anything about investment real estate. CCIM or other commercial real estate designations. Residential agents work with one person usually only once to find a house. You may be able to find an agent who has a management company. She will also be able to tell you what the Gross Rent Multiplier in your area is and help fill vacancies. Cash Flow Before Tax This is what the property is currently producing.

This number should also be postive or it is losing money. These are two good number evaluators to start with and should give you the basic knowledge to understanding more. Make sure your tax preparer knows how to depreciate. Some will erroneously depreciate the property as a whole with one rate.

The building, personal property, and land improvements must be depreciated seperately using different tables. This is where you benefit from your taxes so much. Sometimes I also must advise my clients regarding taxes so they can talk to an accountant or attorney and know what to ask or say. If you transfer it and she goes to a govt nursing home wihtin 3 yrs the transfer will be held against her as I understand the law.

11K on a Seller note sale.

22K, but if she may have to pay a small income tax on the forgiven tax. Your accountant can set this up for you and give you expert advice. Moms her purchase price and the costs to sell, improvements she made, maybe few more.

250K in profits and pay no tax on that. If she passes away before the note is paid then the note goes away.

There is a name for that I forget but this is legal. Each is its own legal entity with its own specific purpose. The second company is more of my long term cash cow. Profits from the consulting group get plowed into my commercial real estate investment group. Ive managed to piggyback on a few deals from my former university roomies father. You need to pull in volume and draw a crowd. Business to Business is the way to go. Theres higher price tags and margin on each sale. The first step in creating the Family Limited Partnership is the preparation and filing of the Certificate of Limited Partnership with the Secretary of State. The form asks for the name of the limited partnership. Any family member residing in the state can be designated as the agent. There are also companies that will, for a modest fee, act as the designated agent for these purposes.

The form also asks for the names and addresses of all general partners of the partnership. The names of the limited partners are not required. Since this document is a matter of public record, the names of the general partners will be publicly available but not the names of the limited partners. At this point, the partnership will be legally formed. You should request that a certified copy of the Certificate of Limited Partnership be returned to you, and your copy should be stamped with the filing date. The Partnership Agreement Concurrently with the filing of the Certificate of Limited Partnership, a written partnership agreement must be prepared. This is the document that governs the affairs of the partnership.

When creating a Family Limited Partnership for estate planning and asset protection purposes, the partnership agreement must also contain certain key provisions designed to accomplish your objectives. Husband and Wife, as general partners, always maintain absolute control over the assets of the partnership. These provisions are unique and essential to a properly structured Family Limited Partnership. Overview In making the decision about funding the partnership, it is important that you understand the distinction between Safe Assets and Dangerous Assets. Safe Assets are those which do not, by themselves, produce a high degree of lawsuit risk. For instance, if you own investment securities such as stocks, bonds, or mutual funds, it is unlikely that these assets will cause you to be sued. Mere ownership of investment assets, without some active involvement in the underlying business, would probably not cause a significant degree of lawsuit exposure.

Dangerous Assets, on the other hand, are those which, by their nature, create a substantial risk of liability. These are generally active business type assets, rental real estate, or motor vehicle ownership, any of which may cause you to be sued. Safe Assets and Dangerous Assets is that you do not wish to have the FLP incur liability because of its ownership of a Dangerous Asset. This is exactly the situation you are trying to avoid.

Dangerous Assets must either be left outside of the partnership or must be placed in one or more separate entities. Dangerous Assets must be isolated from each other and from Safe Assets, in order to avoid contaminating the Safe Assets. Dangerous Assets An example of a Dangerous Asset is an apartment building.

The liability potential of apartment houses is particularly high. Although liability insurance coverage is usually available, the amount of coverage may not be sufficient. The potential liability for such a tragedy could easily reach into the millions of dollars, exceeding by far the amount of your insurance coverage.

Apartment owners can also be held responsible for the acts of the resident managers. Acts such as these may not be covered under your standard insurance coverage. Instead, the best approach for a Dangerous Asset such as an apartment building is to transfer that property to its own separate entity. Generally the Limited Liability Company is the proper way to hold Dangerous Assets.

Since no individual member of an LLC can be sued for an LLC related obligation, the liability associated with the Dangerous Asset can be contained and insulated in the LLC. If a number of Dangerous Assets are owned, each should be placed in a separate entity. LLCs for a client, each holding one apartment building. If a disaster occurred, only the LLC which owned that property would be sued. The other properties and family assets were safely insulated and shielded from liability under this arrangement.

Some types of commercial real estate may also constitute Dangerous Assets. His medical practice and the property were both Dangerous Assets and a liability produced by either would jeopardize the other. For example, a problem arising from the building would produce a claim against the equipment, accounts receivable, and cash in the corporation. The office building should have been separated from the medical practice by holding it in a separate LLC. Dangerous Assets must be kept separate from each other asset.

We will discuss details about the use and operation of the LLC. Safe Assets Safe Assets with a low probability of creating lawsuit liability can be maintained in a single Family Limited Partnership. The first problem concerns the availability of the income tax deduction for home mortgage interest. Based upon the language of the statute, the deduction for mortgage interest would, therefore, not seem to be adversely affected by a transfer into the Family Limited Partnership.

However, until the law on this issue has been conclusively decided you should not risk the consequences of a disallowance of your mortgage interest deduction.

500,000 of the gain from the sale of your home. It is likely that a transfer of your residence into the FLP would cause you to lose this tax advantage. For these reasons, we do not recommend using the FLP to hold the family residence. An alternative is to use a specially designed trust to own the home. All of the tax benefits will be preserved and the highest level of protection can be maintained.

Bank and Brokerage Accounts These types of accounts do not create any potential liability and can be transferred into the Family Limited Partnership. In order to open these accounts in the name of the partnership, you will present the financial institution with a certified copy of the Certificate of Limited Partnership. The institution will also require the Taxpayer Identification Number issued to the partnership by the Internal Revenue Service. Interest in Other Entities The Family Limited Partnership is an excellent vehicle for holding interests in other business entities. The reason that we mention these other business entities is that the Family Limited Partnership must not ever be engaged in any business activities. You do not want the partnership to buy or sell property or goods or to enter into contracts.

If the partnership does business, then the partnership can get sued. And if the partnership gets sued and loses, all of the assets that it holds can be lost. Interest in Other Entities The Family Limited Partnership is an excellent vehicle for holding interests in other business entities. The reason that we mention these other business entities is that the Family Limited Partnership must not ever be engaged in any business activities. You do not want the partnership to buy or sell property or goods or to enter into contracts. If the partnership does business, then the partnership can get sued. And if the partnership gets sued and loses, all of the assets that it holds can be lost. Case Example For example, a client of ours entered into a contract to purchase a shopping center. Previously, we had set up a Family Limited Partnership for him. The seller sued the partnership because the partnership was the named party to the contract. This transaction should not have been handled in this manner. The proper way to conduct this type of business activity is through a separate LLC or partnership arrangement. By using the proper planning techniques, potential liability can be significantly reduced and valuable personal assets can be protected from a dangerous lawsuit. This example illustrates the necessity for conducting business activities through an entity other than the Family Limited Partnership so that family assets are not exposed to the risk of liability. The proper role of the Family Limited Partnership in this context is to hold the interests in the business entities that are themselves subject to risk. The FLP can hold these interests, providing asset protection and estate planning advantages in a single integrated package. Summary The Family Limited Partnership offers a unique capability to realize a variety of planning goals. Assets held in the FLP are effectively shielded from potential claims. Income taxes can be shifted to lower bracket family members or entities such as corporations and trusts to take advantage of deferral and savings techniques. Estate taxes on accumulated wealth and future appreciation can be minimized or eliminated by gifting discounted interests in the FLP to children or trusts established for their benefit. The FLP provides a convenient and flexible format as the cornerstone of your overall plan. In the succeeding sections we will see how Limited Liability Companies and trusts can provide additional opportunities to create asset protection and tax savings strategies. The LLC is the most versatile and convenient strategy for owning rental property, insulating Dangerous Assets, operating a business, and achieving an excellent level of financial privacy. The LLC is a relatively new legal entity created by statute and recognized in all fifty states.

The adoption of the LLC format began in Wyoming and Florida in the 1970s with approval in most other states only within the last ten years. The purpose of the legislation is to allow individuals to create a legal entity that avoids many of the tax and business problems inherent in the corporate and partnership structure. More particularly, the LLC provides the protection from liability of a corporation without the formalities of corporate minutes, bylaws, directors, and shareholders. LLC law specifically bars a lawsuit against a member for the liabilities of the LLC. That is an important distinction which you should understand. LLC legislation was to change this result by clearly stating that the members and managers of the LLC could not be named in a lawsuit against the company. The LLC is also convenient to maintain. The owners are permitted to adopt flexible rules regarding the administration and operation of the business.

For tax purposes, it is treated like a partnership. That means the LLC itself pays no income tax.

All of the income and deductions flow through directly to the members and is reported on their personal tax returns. The LLC is formed by filing Articles of Organization with the Secretary of States office. Unlike the FLP, which requires the names of the general partners, the disclosure of the names of the principals can be avoided. The name of either the member or the manager must be provided in the articles. Also, many states, including Nevada and Delaware, permit a single member LLC to be formed. We will see that these provisions open the door for a variety of financial privacy strategies. Anonymous ownership of financial accounts, business interests, and real estate can be achieved with an LLC as an important component of the plan. The bad news, for physicians and some other professionals, is that state law generally does not allow these practices to be operated as an LLC. Although the LLC may be useful in protecting accumulated assets from lawsuits, it will not insulate the individual from the liability associated with a medical practice. Inside and Outside Liability To understand the benefits available from the LLC, lets look at a typical example. We know that holding the property, as they do now, exposes them to great danger. Ownership of rental property creates more uncontrolled liability and lawsuit risk than any other business or profession we have seen. And because this potential liability usually cannot be covered by insurance, a single unpredictable event, a mistake, or just bad luck can wipe out everything built up over the years. John and Mary own to potential liabilities from the property. John and Mary need to be protected from inside liability. John or Mary from a matter not related to the building exposes the equity in the apartment property to seizure in satisfaction of that claim. We call this type of liability outside liability. John and Marys interest in the property must be protected from outside liability.

If one of them is involved in an auto accident causing serious injury, they do not want to lose the property because of this outside liability. Clearly, owning the apartment building in the current manner is not sound business planning.

LLC Versus Corporation John and Mary could transfer the property to a corporation. Each would own 50 percent of the stock in the company.

John and Marys personal assets to danger. The problem is that this protection against liability is only available if all of the corporate formalities are carefully followed. Since most people do not maintain proper corporate records and documentation, corporations often do not provide the intended level of protection.

Further, corporations are subject to complex tax rules, which can cause severe and unintended consequences.

John or Mary unrelated to the property. For these reasons, it is generally not advisable to hold investment real estate in a corporation. LLC Versus Limited Partnership If John and Mary form a limited partnership to hold the property, one or both of them will serve as general partner. The major problem with the limited partnership format is this unlimited liability of the general partner.

John or Mary for an outside liability would be limited to a charging order, which would not affect the property in the partnership. By forming an LLC, John and Mary can accomplish all of their objectives. Inside Liability Protection A member of an LLC is not responsible for claims or judgments against the company. When we are dealing with a rental property or an active business, the potential liability associated with the business is a primary concern. But as we have stated, the law specifically provides that the members of the LLC cannot be sued. In our previous case study, John and Mary transfer their apartment building to an LLC. If a tenant is injured in an accident, John and Mary, as members of the company, would be protected from any claim relating to the property. Outside Liability Protection Property held in an LLC cannot be seized by a creditor of a member.

If there is a judgment or claim against John or Mary, the creditor cannot reach the property held in the LLC. As is the case with the Family Limited Partnership, assets of the LLC are protected from potential claims against a member. The creditor is limited to the ineffective charging order remedy. LLC is only permitted to take whatever actual cash distributions are made by the company. The creditor cannot force a distribution or demand any portion of the assets of the company. No Formalities An LLC is not required to maintain formal minutes and resolutions. Record keeping requirements can be minimized without a threat that the members will be sued individually for a liability of the company.

Contrast this treatment with that of a corporation.

If the proper formalities are not followed, the corporate protection will be pierced and the owners will have liability for company obligations.

The more money you request for your business, the more your lenders or prospective investors are going to want to know about you, your planning, and your business.

Its just that simple at the bottom line. Do this without fail because prospective lenders or investors will definitely check your credit history. Almost all franchisers offer help in setting up with one of their franchises.

Most will go out of their way to assist you in getting the financing you need. Some will lend you the entire amount; with payments coming out of the income, they expect you to make from their franchise operation. Many will carry this loan themselves, while others will carry part of it and find you a lender to finance the remainder. They are trying to expand their operation, thus increasing their profit, and they are trying to raise capital for themselves. Keep this in mind the next time you see an advertisement for a promising franchise opportunity requiring a substantial amount of cash outlay. You do not necessarily have to have all the money.

Nothing could be farther from the truth. Just a quick bit of research will show that 999 out of every 1,000 businesses were begun on borrowed money. Look to your family and friends for financial help. Agree to sign a formal statement to pay them back in three, five or ten years, with interest.

When you have your proposal assembled, you might even want to think of a limited partnership or even a general partnership arrangement as a way to finance your project. Another common method of obtaining business financing is through second mortgage loans on a home or existing piece of property. In many instances, this is the easiest and surest way of getting the money needed for franchise or other business investment. Take this equity and invest it in a worthwhile business, and you could double or triple your net worth each year for the rest of your life. You could incorporate yourself, borrow money from your family through a second mortgage on your home, and protect against the loss of your home through the Federal Homestead Act. The important point here is that all business opportunities involve risk and sacrifice. Its up to you to determine the feasibility of your success with your proposed venture, then decide on the best way possible to proceed. You can have the franchiser sign with you, or one of your suppliers, a business associate or even a friend. Still another possibility might be to get a bank or a firm that has loaned you money in the past to guarantee your loan. They simply guarantee that they will lend you money in the future if ever the nee should arise. Going straight to your neighborhood bank, applying for a business loan and walking out with the money are just about the most unlikely of all your possibilities. In addition, it would be a good idea to take along your accountant just to assure the banker that your plan is verifiable. In the end, you will find that it all boils down to whether or not the bank officer studying your application is sold on you as a good credit risk. In dealing with bankers, never show an attitude of doubt or apology. Always be positive and sure of yourself. However, dont come on so strong to them that youre either demanding or overbearing. Just look good, know your stuff, and project an attitude of determination to succeed. Your best bet, in attempting to get a business loan from a bank, is to deal with commercial banks. These are the banks that specialize in investment loans for going businesses, real estate construction, and even venture programs. Many commercial banks stage investment lectures and seminars for the public.

If you find one that does, attend. You will meet many local business people, some of who may be able to and interested in helping you with your business plans. When you are looking for money to move on a business deal, it does not really matter where the money comes from, or how it all comes about. It is important that you get the money, and at terms that are suitable to you. Thus, do not overlook the possibilities of an advertisement for a lender or investor in your local papers. Place your ad as well in national publications reaching people looking for investments. It is not a good idea to go to a finance company or other commercial lender of this type for a business loan. The most obvious reason is the high interest creates you have to pay.

These companies borrow money from larger moneylenders, and then turn around and lend it to you at a higher interest rate than they pay. Herein lies the means by which they make money from granting loans to you. The more it costs them to provide the money for you, the more its going to cost you to borrow their money. The only element in your favor when borrowing from one of these agencies is that most will generally lend you money against collateral other lenders just will not accept. They will also pretty much require that your business proposal be backed by the best possible plan. Actually, the different ways of financing a franchise opportunity are as many and varied as your own creativity. The sources of obtaining money are virtually limitless, and available to anyone with an idea. The price you pay to participate in a franchise operation is not always the total cost involved in getting the business off the ground.

Above all else, before you get involved in a franchise or any business venture for that matter, make sure youve conducted a complete and thorough investigation of the opportunity presented. There are a lot of good franchise opportunities, and some not so good. It is important that you be sure of what youre investing in, and that you can make money with it. From there, preparing the proper business plan and the necessary financing, while not always a snap, can be done.

Most commercial lenders will accept the URLA as the initial loan application, but it really is not suited for commercial real estate. Most commercial lenders have their own forms that must be used or the loan will not be funded. There is not a universal commercial loan application used as is the URAL the name of the form tells you the primary use of the form Uniform Residential Loan Application.

When I have done or need to do a commercial loan I have grown accustom to asking if their is an additional form the commercial lender use. Most will say yeah, I then ask them to fax me a copy. Fannie Mae normally dont purchase commercial real estate loans, so there is not a requirement to comply with any Fannie Mae requirements. As far as DRE compliance, most lenders will send you a complete loan application package for your clients to sign. Even though a commercial mortgage company do the loans for commercial real estate they are primarily sold to private investors.

There is not one single form in use that covers all 50 states for commercial loans. Each lender will have its own unique forms, so you will have to have a folder for that lender. If you are talking about apartments, those are considered commercial properties. You are now talking about a business.

This is what the lender is looking at when they want to see income and reserves. They will also want to know if you have any experience at managing a commercial unit. You might want to start out with a duplex, qualify for a mortgage, live in one and rent the other side out.

This gives you two things a rental property as well as the expeerience at renting a commercial property.

You have now got your net worth up, you should have kept some of your money in the bank for potential repairs to your rentals, so now you have reserves.

You have everything a lender is looking for. That is sorta like going to Mcdonalds asking to be given a franchise without putting some money down. The real estate industry is the same way.

Because most people cannot afford to buy real estate with cash, nearly every real estate transaction involves a mortgage. The lender was entitled not only to payments of interest on the debt but also to the rents and profits of the real estate. The mortgage must be executed according to the formalities required by the laws of the state where the property is located. It must describe the real estate and be signed by all owners, including nonowner spouses if the property is a homestead. Some states require witnesses as well as acknowledgement before a notary public. In California a deed of trust to a trustee who holds title for the lender is the preferred security instrument. This form of relief is known as the equity of redemption. Now nearly all states have enacted statutes incorporating the equity of redemption, and many have also enacted periods of redemption, specifying lengths of time within which the borrower may redeem.

Debtors who run into problems meeting their mortgage obligations should speak to their lender about developing a plan to avert foreclosure. Failure to redeem results in foreclosure of the borrowers rights in the real estate, which is then sold by the county sheriff at a public foreclosure sale. At a foreclosure sale, the lender is the most frequent purchaser of the property. Often other creditors bid at the sale to protect their interest as judgment creditors, second mortgagees, or mechanics lien claimants. All such persons must be notified of the foreclosure suit and given a right to bid at the sale to protect their claims. Similar protections are afforded transactions involving deeds of trust. Subdivision or condominium development mortgages that cover a large tract of land are blanket mortgages.

Construction mortgages need special treatment depending on state construction lien law.

Often the loan proceeds are placed in escrow with title insurance companies to make certain that the mortgage remains a first lien, with priority over contractors construction liens. The time of repayment may be extended by a recorded extension of mortgage.

Other real estate may be added to the mortgage by a spreading agreement. In the former case, the buyer acknowledges the existence of the mortgage and, upon default, may lose the title. By assuming the mortgage, the buyer promises to repay the debt and may be personally liable for a deficiency judgment if the sale brings less than the debt. Lenders regularly assign mortgages to other investors. Assignments with recourse are guarantees by the one who assigns the mortgage that that party will collect the debt; those without recourse do not contain such guarantees. Assignments without recourse tend to involve riskier properties. Mortgages assigned without recourse are often sold at a price discounted well below their market value.

Several agencies of the federal government have assisted the mortgage market by infusion of capital and by guarantees of repayment of mortgages. The Federal Housing Administration made possible purchases of real estate at low interest rates and with low down payments. The Veterans Administration also guarantees home loans to certain veterans on favorable terms.

Both agencies contributed greatly to the growth of the housing market after World War II. In the late 1950s, private corporations began insuring repayment of conventional mortgages. Well first a Loan life coverage ratio is also known as a debt service coverage ratio. Here is the information you requested: The most important ratio to understand when making commercial loans is the debt service coverage ratio. To understand the ratio it is first necessary to understand the numerator and the denominator. 65,000 Please note that commercial lenders always insist on some sort of vacancy factor regardless of the actual vacancy rate in an area to cover collection loss. Their logic is that they would have to pay for management if they took back the property.

Finally, NOTE THAT WE HAVE NOT INCLUDED LOAN PAYMENTS AS AN OPERATING EXPENSE. Next lets look at the denominator, Total Debt Service. This includes the principal and interest payments of all loans on the property, not just the first mortgage. NOTE THAT WE HAVE NOT INCLUDED TAXES AND INSURANCE. 14 Obviously the higher the DSCR, the more net operating income is available to service the debt.

From a lenders viewpoint it should be clear that they want as high a DSCR as possible. The borrower, on the other hand, wants as large a loan as possible. If the net operating income stays the same, and the loan size and therefore the debt service increases, then the lower the DSCR will be. This would mean that the borrower would have to come up with cash out of his personal budget every month to keep the project afloat. Generally commercial lenders frown on a negative cash flow.