What is the best business structure for a real estate syndication? In this Highlights episode, we look back at our conversations with Amy Wan of Bootstrap Legal and Scott Smith of Royal Legal Solutions where they share their thoughts about the best structure for your syndication business.
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Amy shares the pros and cons of a GP/LP structure with an LLC. She also dispels some common misconceptions. Meanwhile, Scott talks about having a series LLC and the advantages of this particular structure. He also elaborates why there’s a need to separate your assets from liabilities. Tune in now to this informative show!
Key Points From This Episode:
- GP/LP vs. LLC – which is the best syndication structure, and why?
- Amy shares the considerations for putting together a succession plan for a GP/LP structure.
- Are legal requirements more flexible for a GP/LP structure? Amy dispels a common misconception.
- What is a Howey Test, and what does it tell you?
- How to use the right company structure in real estate syndication?
- What is a Series LLC, and what is the advantage of this structure?
- Can you house your company as a Series LLC irrespective of whether you are dealing in single-family or multifamily homes?
- Learn how a syndicator can limit his liabilities by creating a land trust asset.
- Scott discusses the need to separate your assets from liabilities.
“I think when it comes to folks who are better off at the GP/LP, they tend to people who are not real estate syndicators, they are experienced syndicators who are doing this full-time and have a full-time team.” — Amy Wan
“If you are using an LLC structure, that structure tends to be more flexible.” — Amy Wan
“Typically, what we’re talking about in real estate is that you’d want one LLC per asset, in that way, if there’s a lawsuit involved in that one asset, they can’t go after the other assets. And, a series LLC allows you to do that without having to create a new LLC.” — Scott Smith
“The number one thing for asset protection is to always separate the assets from the operations of the company.” — Scott Smith
Links Mentioned in Today’s Episode:
About Amy Wan
Amy Wan is the Founder & CEO of Bootstrap Legal, which uses artificial intelligence to help draft real estate syndication legal documents faster and cheaper. She has authored Lexis Nexus’ Private Equity practice guide. Previously, she was a Partner at a boutique securities law firm and General Counsel at a real estate crowdfunding platform. Amy is also the founder and co-organizer of Legal Hackers LA, which programs around the intersection of law and technology; was named one of ten women to watch in legal technology by the American Bar Association Journal in 2014 and one of 18 millennials changing legal tech by law.com in 2018, and was nominated as a Finalist for the Corporate Counsel of the Year Award 2015 by LA Business Journal.
Amy has also worked in international regulatory and trade policy at the U.S. Department of Commerce and was a Presidential Management Fellow at the U.S. Department of State and U.S. Department of Transportation. She holds an LL.M. in Public International Law from the London School of Economics and Political Science, a JD from the University of Southern California Gould School of Law, and a BA in Biological Sciences from the University of Southern California.
About Scott Smith
Scott Royal Smith is a real estate investor and asset protection attorney in Austin, TX. He graduated from Albany Law School and began his career in high-stakes corporate litigation. Scott learned the key secret he now uses to defeat lawsuits: that they are a business. Through his defense work, he targets defeating lawsuits before they are even filed by making sure the business part of a lawsuit no longer makes financial sense for a plaintiff to proceed.
Scott founded Royal Legal Solutions to offer tax, business, and legal strategies to real estate investors. He has spent the past 8 years of his career diving through case law, reading the ever-changing tax code, and analyzing real estate investment so that you don’t have to. He works with clients all over the United States and Canada who want to grow their businesses and protect their hard-earned assets. For reasons only he may know, he gets a particular thrill out of sharing the secrets he studied and worked very hard to learn with ordinary investors. He is a regular expert contributor to BiggerPockets.com and other real investment communities and is currently writing an eBook on asset protection strategies to help educate the public.
Scott isn’t just a lawyer, he is also a real estate investor himself. His claim to fame as an attorney is his uncanny ability to make his clients “judgment-proof.” He uses a combination of his legal expertise, experience as an investor, and love of helping others grow and protect their businesses to build ironclad asset protection plans for his clients. Clients who employ Scott’s strategies tend to stay out of court altogether. His primary expertise is in stopping lawsuits before they even start.
Lawsuits can ruin your business and everything you’ve worked for. If you’re a real estate investor, contact Scott today to see how well your strategies are working for you and protect yourself before it’s too late. Scott and his staff at Royal Legal Solutions pride themselves on creating customized plans for your business success.
Currently, Scott lives in East Austin and is the proud father of an adorable Poodle named Franny. When he isn’t busy protecting his clients, he loves to practice jiu-jitsu/muay thai kickboxing, explore the outdoors, and travel. His personal goal this year was to climb Mt. Kilimanjaro, and he succeeded.
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