Posted by Wayne-NC on January 30, 2005 at 22:14:59:
What was mentioned here is a form of equity stripping. Nobody wants to take a heavily encumbered asset for a judgement award. Get as much as you can out with a HELOC. Now the question is what to do with the money. I invest in buying mortgage notes or deeds of trust that pay an attractive rate of interest for cash flow. That is still at risk ofcourse, so a good liability policy with an umbrella policy over it should do the trick. If there is more involved, you can create a trust with the beneficiary being a SMLLC or a Family Ltd Partnership. As mentioned above, see an attorney for further details. What I offer here are just ideas.
Hello,
I am an aspiring real estate investor. The only capital I have access to is equity in my mother’s Rental property. It has $0 mortgage (totally paid off). She is asset rich, cash poor and I would like to help her generate more cash flow. She will have no part in the management of the investment.
What resources should I explore to figure out how best to protect her (one and only) asset through the process of investing? Either through some sort of corportation, or limited liability company?
Any thoughts more knowledgable Investors could contribute would be very helpful.
asset protection / limitation of liability seems to be common questions. Several issues depend on the specific circumstand and state in which you live.
Find a CPA and/or Atty to help you structure the entity(ies) that will hold the property(ies).
Thanks for the reply. What I am most concerned about is how to protect her from the risks. I am not totally sure what they even are as of yet, but am not about to naively think that there arent any. I have heard that forming a company of sorts can be protection against risk, but would rather not go to the bother if its not true.