Think you’re protecting yourself and your real estate investments by putting each property in a separate corporation, trust, or limited liability corporation (LLC)? It may be time to reconsider and identify weaknesses in your asset protection plan. The Democratic Socialists of America’s (DSA) Chicago chapter recently created a website called Find My Landlord, a landlord database for the city of Chicago. Its goal is to help quantify the number of properties owned by an individual landlord, regardless of whether the properties are held in separate entities.

Find out what you need to know as an investor about this new trend of landlord databases and a few ways you can further protect yourself and your assets.

What is a landlord database?

The DSA Chicago chapter’s Find My Landlord database allows tenants or other inquiring individuals to search by address, providing the number of properties owned by that individual, along with additional information. Volunteers manually cross-checked public records from the assessors website, the Department of Buildings, and the Recorder of Deeds to compile a list, not by owner’s name or corporation, but by their tax mailing address, which was then linked back to the owner. The key for the map categorizes the landlord into number of properties under the same tax mailing address into “# not determined”, 1-2, 3+, 10+, and 100+. Few are “# not determined.”

A single click gives you a downloadable file that lists every identified property address this person owns, the community area, and each property’s number of units. A click on additional details lets you see information like how much money that business received from the federal Paycheck Protection Program.

How can it affect investors?

When a tenant doesn’t pay, depending on the landlord tenant laws for your state, it typically results in either payment or eviction. The Eviction Lab at Princeton University found approximately 3.6 million individual eviction cases are filed a year in the United States, which results in around 1.5 million eviction judgments annually. From an investment standpoint, having nonpaying tenants is clearly not a sound business model

The Find My Landlord website encourages the formation of unions within each owner’s network of buildings and is coordinated by the Autonomous Tenants Union, which offers a hotline tenants can call five days a week to help them quickly and efficiently organize landlord-wide tenant unions. The creators stated their intent was to help groups band together and fight back against evictions and identify if neighborhoods are being gentrified. But the effect, depending on the tenants’ prerogative, can have such far-reaching uses as knowing where to rent and who to potentially sue.

What can you do to protect yourself?

The obvious and initial first step for all investors is to always have, at the bare minimum, a current legal entity that has updated annual reports and a clear separation of entity and self. Forming an LLC online and simply paying your annual fee will not hold up in court. Determining the right type of corporation for your purposes is best identified by consulting an asset protection attorney, as well as a tax advisor who specializes in business planning.

Ideally, and in addition to each property being held within its own legally sound entity, you can further protect yourself by using a registered agent for all your mail. This will make it more difficult to track down you as the owner. In this landlord database example, they would only be able to track the property to a registered agent, not the owner. You can also look into creating an umbrella entity registered in a landlord-friendly or pro-business state. These kinds of states protect strong business privacy and usually have other business incentives, like low taxes.

The Millionacres bottom line

General social unrest and severe economic implications for many due to COVID-19 have set the stage for uncharted territory. It is likely we will continue to see similar movements across the county to inform and unionize tenants by creating landlord databases similar to the Find My Landlord database in Chicago. Protecting your privacy and reducing your liability or odds of litigation is crucial to building a successful business and ensuring the financial well-being of your and your family. Straightforward and completely legal actions can be taken on your part to achieve this goal. It’s important to consult with professional attorneys and tax advisors who specialize in asset protection to ensure you’re fully protected and the entities are correctly structured.



Source Google News