LLC Strengths & Pitfalls, with Tzvi Weiser

Welcome to the CRE Clarity Podcast with Jeremy Goodrich. Today’s guest is Tzvi Wiser, Senior LLC Specialist at NUCO Filings. In this episode, we explore the flexibility and structuring of LLCs in real estate, the compliance requirements they must meet, and the impact of the new Corporate Transparency Act. Tune in to stay informed about emerging trends in real estate!

Learn more about Tzvi and his story at creclarity.com!

“The big syndicators usually don't make mistakes because they got lawyers taking care of them. It's the beginers that often make the mistakes.”

 

01:00

Tzvi explored various career paths, from accounting to the high-tech industry, but during the pandemic, he found his niche in real estate LLC creation.

 

Tzvi discusses the best strategies for creating and structuring LLCs. He highlights that LLCs are generally more flexible than a typical LP, offering different classes of shares and various arrangements for profit sharing. However, the distinction between limited partners and general partners is not always clear.

 

One common strategy with LLCs is to place all the risk in a company with no assets. A recent trend for GP investors is to set up 3 LLCs: a management LLC, a GP LLC (from which they receive their extra share), and a third LLC for regular limited partner investors.

“The key with the operating agreements, is they all have the same sections and there's no right and wrong in any section. The question is, what works for you?”

 

17:30

Tzvi shares his insights on some of the most important documents GPs and LPs need to have in place to protect themselves in a deal. The most crucial document is the operating agreement, as it is the backbone of the LLC. It’s important to establish what works best for each partner.

 

Next, Tzvi covers compliance requirements for LLCs. There are two key things needed for most LLCs across different states:

• A registered agent – Many people serve as their own registered agent, but if the LLC operates out of state, a filings company typically assumes this role.

• Filing an annual (in some states biannual) report.

 

Tzvi also discusses the Corporate Transparency Act, which aims to track LLCs. Effective as of January 1st, 2024, this federal filing requirement can be challenging for those with multiple LLCs. To simplify the process, Tzvi recommends that all business owners obtain a FinCEN ID, which automatically updates any changes in LLC member information.

30:00

Toward the end of the conversation, Tzvi shares what he’s most excited about currently. He’s thrilled that the barrier to entry in real estate is lowering, especially with the rise of tokenization, which allows anyone to invest at any price point. However, he also expresses concern about increasing compliance regulations.

 

Finally, Tzvi leaves listeners with a key takeaway: People should focus more on listening to each other—listen to the message and not the messenger.

About our Guest, Tzvi Weiser

Tzvi is an 18-year member of the NYS Bar Association, with an MBA and accounting degree.

He is a 1031 exchange team leader at Nuco Filings. Nuco Filings is boutique entity formation and compliance firm. They will work with you hand in hand with urgency, speed and professionalism. They manage many large LLC portfolios for big players who rely on us to keep their entities in good standing and provide them with critical real time information, which often gets lost between the cracks.

Mentioned in the show:

1. His LinkedIn

2. www.shineinsurance.com/

3. The REI Clarity Framework

Need an instant insurance ballpark for your next Multifamily deal?! Answer 9 simple questions and we’ll give you a sense of what insurance should be. Visit us here for everything you need to know: https://www.shineinsurance.com/ballpark/ 

 

Special thanks to Tzvi Weiser for taking the time to share so many great insights with us

 

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Show produced by Eni Horvath