Can't afford to set up to file your business entity? What do you do to stay safe?

A while ago I was doing some mobile home investing research and I came across a transcript of a round table Q&A of a few mobile home guru’s and newbie investors.

I personally love Q&A mobile home workshop because no matter how much I study there is always someone who ask a question I am thinking and have not gotten an answer to our did not think to ask.

And this is what got my attention.

I shave my head but if I didn't the answer would have made my hair stand on end.

Someone asked what to do if they could protect themselves if they could not afford to create an legal entity.

The head guru said not to worry about creating a an legal enity until they have like 8 or 9 mobile homes producing income and have decided that mobile home investing is for you... and the JR. guru agreed.

Using another transcript from one of the guru’s during another presentation I want to show you how bad this can get with the most horrific story I have ever heard.

This guru (The same one who said you don't need a legal entity) likes to rent out his mobile homes to section 8, he really likes section 8 because the tenets are not as picky as some people and the check comes from the government directly so they are never late.

To jump right into the story the guru had a mobile home that he was renting to a woman who he found out left her children alone for days on end and on one of these trips her children had burned down the mobile home and one of them died in the fire.

The father of the surviving children had a lawyer that sent the guru an intent to sue letter for providing an unsafe habitat.

Having had two Lawyers as mentors I can tell you a bit about how good lawyers work and how shyster lawyers work.

I can only guess but my thought is that a shyster lawyer contacted the father and said “Lets sue, you pay nothing up front and I get half” any self-respecting lawyer would know that section 8 housing is checked out (or should be anyway) and is signed off as a safe habitat.

Well… luck was with the guru because for Christmas he had asked for a video camera and his wife was griping that he never used it so it just so happened he had on tape the section 8 lady being shown around the mobile home and commenting on how nice  and safe it was.

He sent that tape to his lawyer, who made a copy and then sent the copy to the shyster lawyer and 4 days later his lawyer called him and said the lawsuit was dropped.

Another thing about shyster lawyers, they are all willing to help you sue when they get an easy win, but if you send them a curve ball like this they go back to their client and say "Look... your going to have to pay me up front for this. I get a $500 retainer and charge $50 an hour and bill in whole hour units so every 5 min call is going to cost you $50. How much do you have on you right now? 

And that pretty much puts an end to garbage lawsuits. 

Now that’s all well and good if you remember to make a video tape every time you sell a mobile home, but what if you don’t?

Imagine your at the Q&A with these two guru’s and they tell you not to worry about it until the 8^th or 9^th mobile home and on the 7^th mobile home that horrible incident happened to you and you had no video tape? What do you do?

I am not saying this would not be a real tragedy if it happened to anyone, what I am saying is that some people have a get rich quick or vindictive mentality and we should not have to pay for an error that was not on our part.

As long as we are acting in good faith we shouldn’t need to worry is all I am saying and this is the simplest and most cost efficient way for those of us who can’t afford to set up a legal entity.

When I was in California it was something like $1000 just to have the lawyer look at your articles of incorporation, now it’s less but it’s still expensive.

The way things are now you can check out a book from a library, word for word duplicate the forms and for where I live, file with the Secretary of State and pay $150 and you’re an LLC.

But here is what you can do if you don't want to set up your legal entity yet. 

Now if you wanted to be stone cold sure you could go to a local lawyer and tell them you want a cookie cutter vehical property trust with them as the trustee and you as the beneficiary so every time you get a new mobile home all you have to do is send them the paper work and they send you the monthly check for the mobile home payment. (They will charge you for this, and they will charge you every time they mail out a check.

OR…  

I don’t get any kick backs from this guy but you could go to http://askmikebutler.com/  and down load a cookie cutter vehicle trust set it up yours following the directions and all for a whole lot less from Mike Butler.

Personal Property Trust on line $79.99
https://m128.infusionsoft.com/app/storeFront/showProductDetail?productId=692 

Personal Property Trust Print $49.99
https://m128.infusionsoft.com/app/storeFront/showProductDetail?productId=453

That way if GOD forbid someone like that moved into your mobile home that you were selling rent to own, and something horrific happened if anyone did try to collect all they would get is whatever was left in the trust bank account and the insurance money for that mobile home.

 Now I found Mike’s website from doing a search on YouTube and saw his video. Mike tells you to use the address as the name of the trust.

DON’T DO THAT!

The first thing a shyster lawyer does is do a search by address and if lo and behold your trust shows up he or she goes after it hammer and tongs.

To give yourself a little bit of breathing room. Let’s say you were a patient person and you were not all gung ho to get all your 12 mobile homes for whatever reason but you were patient enough with your 7 mobile homes that are generating $250 each in passive income to hide the money and save up for a whole year to take your family of four on one of those Viking River Cruises (I just happen to have the catalog right here) and you stayed 14 days in the Oxford Highclear Castle (the real Downton Abby) and it cost you $22,384.

That in mind setting up for that you forgot to get all the checks from your individual trust and the money is just sitting in the trust bank account. The shyster lawyer finds the trust and the bank account and names it in the lawsuit.

Snap! I mean it’s less then $1,000 but still that’s 1/6^th the cost of your 8^th mobile home and that mobile home was going to be your tipping point to ramping up to having 12 mobile homes and then retiring from the rat race and just volunteering your time and going on vacation a lot.

Maybe where you are $250 a month is a joke, maybe you’re like I am and you only do a deal when you can cash flow $350 but that doesn’t matter.

It’s your money and other people shouldn’t be able to get their hands on it.

So here is how you get around that legally.

Most (not all, but most) shyster lawyers are not famous for their document searches. If you have a trust in the name of the address of where the mobile home is it’s going to pop right out at them. But if you name it something ambiguous like Desk Workers of Omaha Trust, if they even catch it they are going to blow it off. It will not come up until they do the title search and that takes a while.

If the trust is set up to mail you your check on the 5^th and the fire happens on the 2^nd, odds are good that your trust will have mailed out your check before the shyster lawyer finds the trust bank account.

Say your trust bank account is in a bank like mine, you have to have $250 in the account or they charge a $10 fee every month. So they lawyer gets a judgment and it gets all assets in the trust. $250 and the insurance you had on the mobile home, say like $25,000.

That’s awesome.

Yeah your out the insurance money but so what… if you had done what the guru’s said you would have been out all 7 of your mobile homes, your bank account, and maybe your house and car.

If you can afford to get a legal entity then by all means do it. I myself have an LLC that is the trustee for my Trust and me as the beneficiary.

But if you can’t afford to create an legal entity, then this is a good way to protect yourself until you can or until you decide if Mobile Home Investing is for you.

I bid you Peace and Prosperity

That Mobile Home Guy

Wade