what's up guys clint coons here and in this video we're going to talk about something that i didn't
even know about until a client reached out to me and that is called tiny houses and short-term
rentals how to structure that type of deal all right let's get started okay so what is a tiny
house and a short-term rental and how does that all play together well what i was surprised to
learn about is that let's assume that you you have a piece of property right here and your main house
sits on the property like this and you decide you want to take advantage of airbnb short-term
rentals but you don't want people coming into your main house i get it so what do you do then
well you build a small structure over here on the back side of your property and this becomes
your short-term rental now the reason we call it a tiny house is because that's what it is it's you
know it's maybe 600 square feet uh property that's really decked out it's really nice and people want
to stay there because it's in a desirable location walking distance to sites and things like that
so the question that came up is hey if i'm going to set up a structure like this where
i'm going to put a short-term rental on my property one of these tiny houses how do i
go about protecting myself because obviously you're going to have a lot of people coming
in and out of this property you know average rental seven days or less i've got some great
videos on that if you're into short-term rentals be sure to check those out on my channel i'll put
some links in the show notes about short-term rentals from the tax side that you should watch
if you're into this type of strategy now in this scenario you got these people coming in and out
and if something happens on the property let's say that you had a pool on your property over here
but here's the deal you tell the short-term rental tenants the pool is off limits we're not allowing
you to use the pool so please don't don't go that way maybe you have it fenced in but you never know
one night this person right here has these friends over and they're drunk and they jump the fence and
then dive into the short end of the pool and one of them now hits his head and he becomes
a quadriplegic far-fetched actually it's not one of my fraternity brothers that in fact happened
to him but it happened to be at a hotel climbed the fence drunk and he became a quadriplegic so
liability can exist here so what can you do to protect yourself now a lot of people might
say just jack up the insurance not a bad idea to carry a little extra insurance there but the key
is how do we use an entity to protect ourselves on this situation because it's all on one tax parcel
well the key here is to separate out this section now of course you're not going to be able to go
down to the planning department and say i want to subdivide off this portion of my property get a
different tax parcel number for it because it's going to be zoned in such a way where you maybe
cannot break this up that would be the ideal way try to break the property up but you probably
can't because you're sharing you know water and sewer or septic depending on where you're at
so then the question is i want to isolate this so what you might consider doing is creating a
limited liability company down here set up an llc and then deed uh this property into the llc now
it's coming in as one parcel number okay the whole property but so i would create it as a tenant in
common relationship with myself or if you watch some of my other videos what you may want to
do here is have your portion held in the land trust here for anonymity purposes so we got this
this property now on title would show that there's two owners there's a limited liability company
and there's your land trust over here that's holding your portion of it so you have anonymity
so if somebody looked at title right here they wouldn't know that you own this property because
you could structure it in such a way that you have the anonymity through these entities now
let's say we're going to do that one of the other things you should look at as well contact
the planning department and try to get a second address okay for this property now what could that
mean well let's say that this property the address is 732 broadway maybe you call that 732 and a half
broadway or 732 suite a broadway uh or dash a any way you can to differentiate it differentiate this
address from your primary address that is key all right so get that done first
then look at this structure and so then when you deed the property in to this this structure
what you're going to do here is you're going to put a notation down in the bottom of the deed
that this llc owns this property right here and on this side you're going to do the same thing that
this trust owns everything but that property right there it's through a parenthetical notation in
the bottom of the deed which would put anyone on notice if they were coming after you that
hey if you're going to sue because you're injured on this it goes to this limited liability company
it is the owner now this also implies that when you're dealing with the tenants you're dealing
with them through the limited liability company that all money and insurance for this portion
of the property runs to that limited liability company and not to you personally because you
can really screw all this up right muck it up when you're you're just having the money paid to
yourself paid to your trust or paid somewhere else and and that llc is there in name only
it actually has to function like the property owner so any insurance pay its portion of the
utilities and things of that nature so it is someone who's coming in i mean just treat it as
if you wanted to bring someone in and rent this on a full-time basis what would you ask them to pay
that's what the llc should be picking up so tiny houses it can be done obviously
the best way would be to separate it out but obviously you may not be able to do that go in
after you build it get that second address now of course some people like to put a tiny house
on their property they don't get the permitting for it and if you go in to get an address well
you're going to get caught on that of course and that's going to be an issue for you
so if you're one of those who not going through the permitting process you're just throwing up
up on your property well maybe this strategy isn't for you because you're trying to fly
under the radar screen but for you legit investors that's the way i would take it
hey guys be sure to hit the like button if you like this video and subscribe to
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bye