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Old 04-07-2020, 04:47 PM
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Originally Posted by leadcounsel View Post
While it would be tempting, putting your residence (and actually both properties) at risk as collateral is extremely dangerous in a worst case scenario.

It would be nice to have that property, can you leverage something else? Loans from retirement accounts?
The 160 acres are going to be owned by a LLC if that makes any difference. But I don't foresee the property value on the house dropping below what we want to borrow, that would be down to1/3 of what it cost to build.
Besides, If we can make the payments now, we should be able to make the payments later, even if I have to use my whole social security check.
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Old 04-07-2020, 09:53 PM
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Originally Posted by Harmless Drudge View Post
Buy the land under an LLC that belongs to an inter vivos revocable trust. Have the trust drafted in a state where unincorporated trusts are entirely private and be sure it is construed under the laws of that state. Preferably have the LLC organized in a state where none of the members need be publicly listed.

Then, and this is key, create another such arrangement of trust and LLC and write a mortgage to that entity for several times the value if the land and all of it's current and future improvements.

For example:

Calibron Investments, LLC, a Nevada limited liability company, owned by the Chuzzywumple Trust (your trust) writes a mortgage for $7.6 million to Archeron LLC, a Nevada limited liability company, owned by The Hackworth Trust (your other trust).

Let's say some slip-and-fall artist sues you for $100K. Well, the judge or jury might be inclined to agree, but how are they going to get that $100K out of a property that is $7million upside down?

Or say the government, at some level, wants to use their process as a punishment an take your land through eminent domain. Properties with equity are the low-hanging fruit, as they can more easily dictate the value. But you have more of a leg to stand on if you take them to court if your property is mortgaged for a huge sum. That way, you dont nee to reveal secret improvements to validate the value you want, and they cant force your hand and punish you for having secret improvements.

And if, for some reason, it is taken from you anyway, the mortgagee LLC has a massive loss on paper to write off, against which it can earn a lot of money effectively tax free.

The biggest and most egregious threats are not the private sector criminals.

That kind of sham transaction would be pretty easy for an opposing attorney to see thru.
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Old 04-09-2020, 03:14 AM
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That kind of sham transaction would be pretty easy for an opposing attorney to see thru.
And do what with?
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Old 04-09-2020, 05:27 AM
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I’d wait. Real estate prices , especially land are about to go way down. Just like they did after the last downturn. You’ll get a better deal later.

You may want to borrrow the money NOW against your house before the value goes down. But I’d wait to buy property for about 6 months.
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Old 04-09-2020, 06:04 AM
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I'd be hesitant to mortgage a debt free property, unless you live in an area that will be intolerable to live in if the economy tanks even further.

There's a lot of security in having full ownership of your residence. You'll always have a roof over your head no matter what...or at least so long as the State of California doesn't tax you out of it.
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Old 04-09-2020, 06:21 AM
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Real estate prices may go down, but not because of old people dying off
There is a three million unit housing shortage at present.
Few, if any here understand how many millennials there are, a whole freaking lot.
The ignorance of demographics blinds them to the economic reality that will and is driving markets to greater and greater degrees. Same thing with politics.

Protect yourself with insurance
The LLC will be discovered in a debotor's examination

If you have to, get an off-shore trust, like a Bahamian Family Trust
Check-out Incorporate 123
I have used them for years
Nevada has changed their trust laws and judges are allowing charging orders which was the real protection, i.e. not allowing charging orders
Currently I moved my Nevada trust to Wyoming

California has fairly generous homestead exemptions

I would refinance the current home, not get a HELOC
I would buy the other property
Live your life for the six years and then sell your house and move
If you have equity, get the money out of the house before the housing market crashes if such a crash occurs at all
I could go on and on, but I represented many clients who lost millions of dollars and lost all their property portofolio, commercial, residential whatever like dominos. And smaller fish who just stopped paying their mortgage for many years and lived "rent free." Many made out like bandits with a restructured loan atna lower interest rate with principal forgiveness.
The more people ripped off the note-holder, the better they made out as a general. The hardest people were the solid citizens

Even if you default, the holder of the note will merely do a non-judicial foreclosure and you will be done with your current house. I doubt any of this will happen. But if it does, the lender will not pursue you personally, as again, the note-holder will do a non-judicial forclosure.
You might even get to live in your current home for free for five years, pay zero mortage payments, and get "cash for keys" relocation $$$$$ as so many of my clients did.

The HELOC loan, if defaulted on, may well get sold off to third party who will seek direct recourse. I have never seen direct recourse on a primary home loan where borrower resided in the home as a primary residence in California
In theory it could happen but there is a non-recourse law for original home loans in California which may protect you even if you do not need protecting

It costs a fair amount of money to maintain a trust. The same money would pay for higher limit insurance policies and an Umbrella policy.

Put all your real property in a family trust

Live your dreams


I practiced law in California in these exact areas for 30 plus years so take it for what you paid for this perspective but do not take it as legal advice
Consulting with an attorney for the living trust is where I would start
You probably already have one
After you make sure you have a wall /umbrella of insurance coverage


After you get your insurance in order and refinance your house
You are Golden

Live your dreams
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Old 04-09-2020, 11:22 AM
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Quote:
Originally Posted by Jdog67 View Post
I'd be hesitant to mortgage a debt free property, unless you live in an area that will be intolerable to live in if the economy tanks even further.

There's a lot of security in having full ownership of your residence. You'll always have a roof over your head no matter what...or at least so long as the State of California doesn't tax you out of it.
True, but I would rather be debt free on 160 acres and live in a tent than on the 1/3 acre we are on. Even though we do have a very nice brand new home on it.
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Old 04-09-2020, 11:55 AM
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Amen to that
Seclusion
Privacy
Freedom
And a spring make this a no brainer if it were me
I have always lived in the sticks
You are 100% right
Better to live in a shack on that property than where you live now
I have two wealthy brothers
I would not trade places with them even though they have multi-million dollar homes
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Old 04-09-2020, 12:33 PM
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Can you sell now and capture high prices, move into a temporary rental, buy that property outright, and build on it and move to it?
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Old 04-09-2020, 12:48 PM
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Can you sell now and capture high prices, move into a temporary rental, buy that property outright, and build on it and move to it?
Not practical, no rentals available due to the loss of 14,000 houses in town in the fire. Even if we were to find a rental, it would cost twice as much per month than taking out a loan against our current house.

I'm just not seeing a downside to borrowing against the equity in our home in order to own the 160 acres outright. The worst that could happen is that the housing market goes down and our house would be upside down in debt, in which case we keep making the payments until it is worth more again or it is paid off.
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Old 04-09-2020, 12:55 PM
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Short answer
Do not borrow on home
Re-finance primary residence
i.e. get a single mortgage "re-finance"
Never ever get a HELOC or a second mortgage
Never ever
They will come after you
HELOC super stupid
That will never be forgiven

I am giving you expert advice
Have your attorney opine

Re-fi home
Buy Eterna
Live six years
Sell home
Move permanently to Eterna

I have had my say
I hope you find what you are looking for
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Old 04-10-2020, 05:06 AM
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Quote:
Originally Posted by NCalHippie View Post
Not practical, no rentals available due to the loss of 14,000 houses in town in the fire. Even if we were to find a rental, it would cost twice as much per month than taking out a loan against our current house.

I'm just not seeing a downside to borrowing against the equity in our home in order to own the 160 acres outright
. The worst that could happen is that the housing market goes down and our house would be upside down in debt, in which case we keep making the payments until it is worth more again or it is paid off.
The (fairly minimal) risk of something happening to your now (then) mortgaged house before you have a livable structure on, or the ability to move to you 160 acres. (I am assuming you have an economic plan to build...)

Particularly as yall have practice living in a camper....

I would do it.
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Old 04-10-2020, 07:33 AM
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Originally Posted by NCalHippie View Post
Seriously considering getting a home equity loan to buy what I think is close to the ultimate bug out property. 160 acres, huge spring fed pond with bass and crappie, flat land as well as hilly around the flat area. Reasonably remote off of a gravel road but only 13 miles from a medium size town. And get this! $160,000.

Now, my question is, does anyone have personal experience with home equity lines of credit? We are currently debt free so a little reluctant to do such, but we would own the BOP outright and still have $200,000+ in equity in our current house (brand new).

Any thoughts appreciated.
A home equity line of credit is very handy even if you do not use it.
I have used mine to make deals that I would have missed without quick access to funding.
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Old 04-10-2020, 08:50 AM
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Originally Posted by Nomad, 2nd View Post
The (fairly minimal) risk of something happening to your now (then) mortgaged house before you have a livable structure on, or the ability to move to you 160 acres. (I am assuming you have an economic plan to build...)

Particularly as yall have practice living in a camper....

I would do it.
In fact we still have the 33' travel trailer and could move it onto the property at any time. My initial plan would be to build a hunting cabin ASAP and go from there.
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Old 04-10-2020, 02:52 PM
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You don't say where - I would HOPE you're getting the heck out of Komifornia with this new property.
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Old 04-10-2020, 04:09 PM
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You don't say where - I would HOPE you're getting the heck out of Komifornia with this new property.
No, I am perfectly happy here. There might be a few things I would prefer be changed, but for the most part, I can do most anything I want to do and you can't beat the weather or the diversity of crops you can grow.
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Old 04-10-2020, 05:12 PM
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I think you’d really have to run the numbers on this because the interest on the home equity line is higher than on a mortgage (at least it is on mine). Given the rates right now, I would think you’d come out with more equity on a 30 year mortgage on the new property, which you could pay off when ready.
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Old 04-10-2020, 05:33 PM
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I think you’d really have to run the numbers on this because the interest on the home equity line is higher than on a mortgage (at least it is on mine). Given the rates right now, I would think you’d come out with more equity on a 30 year mortgage on the new property, which you could pay off when ready.
Thanks! And we we could get a loan on the property itself but that would require 30% down which would eat into our savings more than I would be comfortable with.

For now, I am holding off until we walk the property and then see what the bank can do for us. I really do think borrowing against the equity on our house will be the way to go. Credit rating should be no problem, when we bought my wife's Grand Cherokee they ran our credit (even though we were paying cash) and said it was about 830, so we should be able to get a good rate.
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Old 04-11-2020, 07:42 AM
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Originally Posted by Jack Swilling View Post
The LLC will be discovered in a debotor's examination

If you have to, get an off-shore trust, like a Bahamian Family Trust
Check-out Incorporate 123
I have used them for years
Nevada has changed their trust laws and judges are allowing charging orders which was the real protection, i.e. not allowing charging orders
Currently I moved my Nevada trust to Wyoming

California has fairly generous homestead exemptions



It costs a fair amount of money to maintain a trust. The same money would pay for higher limit insurance policies and an Umbrella policy.

Put all your real property in a family trust

Live your dreams


I practiced law in California in these exact areas for 30 plus years so take it for what you paid for this perspective but do not take it as legal advice
Consulting with an attorney for the living trust is where I would start
You probably already have one
After you make sure you have a wall /umbrella of insurance coverage
This is a genuinely probative question. I am not intending to be argumentative or pedantic, but rather to learn from your knowledge and experience:

If the property is owned under an LLC organized in a state that does not require any of the members to be publicly listed, and the LLC is held by a trust drafted in, and construed under the laws of, a state where unincorporated trusts are entirely private and not filed at the county courthouse, and all banking and property transactions are conducted by a trustee who is an arm's length acquaintance, how would anyone even know, let alone demonstrate to the satisfaction of a court, that the OP was, in any way, involved with the ownership or the disproportionate encumbrance of the subject property?
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Old 04-11-2020, 08:12 AM
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That is a good question

The LLC/ will be discovered in a debtor's examination
If you know anything about judgement creditors and their attorneys
I do.....
Unless you commit perjury, and there is no evidence to cover your lying, they will find out
If you are not willing to lie, I would not, then what use is the LLC ????? The only use is to slow the roll and hope the plaintiff and the attorneys are disinterested in suing you on the first place.

If you are in a bankruptcy meeting of creditors, they will find out unless you lie to the court and there is no evidence, but lying to a Federal Court, really stupid idea
Me, I would think long and hard about perjury in State court and especially Federal Court

Domestic LLCs are best considered as a good pre-judgement protection from a preliminary asset search. It may disuade the plaintiff and any attorney from from wanting to sue you in the first place.
As that is the only real protection with a domestic LLC

California is a community property state, so as a general matter, you sue one spouse, you are in effect suing both spouses. That is a key consideration here. That and California's fairly generous Homestead exemption.

Why make a science project of it and engage in crime to hide the truth when ther are better ways forward ????? Sure get an LLC to own the property, but the most useful and cost effective LLCs unnecessarily complicate estate planning where a family trust and killa insurance are much better protection along with the fairly generous California Homestead exemptions.


My LLC, you have to start in Panama and go to Hong Kong before you get any info if you are a judgement creditor and all they have to do is ask me one simple question
A simple question by a judgment creditor blows it all up
That is why rich/sophisticated people's asset protection begins and ends offshore
I am not rich and I do not want to pay for the expense of offshore asset protection

Any one else involved in the perjury scheme, your spouse/children, and it becomes a criminal conspiracy

A Bahamian Family Trust or other offshore entity will do far more and no need to lie
You can tell the judgement creditor the truth and they can pound Bahamian sand
But these offshore measures that are what work, cost a lot of money

Why use crime as a false protection ?????
Why waste money ?????
I see zero reason to waste time with half measures, crime, or criminal activity
California has way above average Homestead exemptions

Very, very few people need to worry about any of this in the first place, but something could happen.

Again, dollar for dollar, healthy insurance policies with excess/umbrella policies stacked on top of the primary policies offer great protection with the California Homestead protections as an added bonus
The only thing better, is bullet proof offshore asset protection, but that will cost you a lot of $$$$$

Last edited by Jack Swilling; 04-11-2020 at 08:51 AM..
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