Hey guys, it's Clint Coons here.
And in this video, I want to discuss how to protect your assets
in the event of a housing crash.
Okay, let's get started.
All right.
Now, I've been through this before, back in 2007,
eight, nine, ten, you saw what happened with the housing crash.
And there were those investors who had taken necessary steps
to protect their assets.
And they came out of it relatively unscathed.
But I also saw a lot of investors who just didn't do the right things and
ended up jeopardizing all the investments they made up until that point.
Now, why was this what was brought on, of course, as you know, by the banks?
And so what we're looking at here when it comes to a housing crash,
what are we trying to protect you from?
We're trying to protect you from a situation
where your property is devalued and you have to go into the bank,
let's say, and renegotiate your mortgage because it was a five year
note or something like that.
And then the bank looks at the value of the asset
and they say, Yeah, we loaned you on this property.
It was valued at $400,000, but now it's valued at $250,000.
Therefore, because of that drop in value,
it doesn't fit the debt to income requirement that we have.
And you need to come to the table with more money.
All right.
In order for us to give you a new loan on that property,
the other situation that would come up is that someone would buy
a piece of property, you know, $400,000, for example.
And it's bringing in at this point in time,
1800 dollars a month in rent.
But then when the crash hits,
the rental income drops down to 1500 dollars a month
because there's more properties out there now.
And the tenants,
of course, only paying 1500 doesn't pay enough to cover your mortgage.
So then you fall into default on your mortgage.
They foreclose and maybe there's a deficiency judgment because you've also
had a decline in the property value.
My point in telling you all this is that when it comes to asset
protection planning, you've got to think about more than just
what most people do is, you know, these protecting real estate in LLC.
That's that's part of it.
And, and actually what occurred during that housing,
the last housing crash you went through is that a lot of people
didn't protect all their assets,
didn't have all their properties in separate, limited liability companies.
And it really left them exposed to lenders who came after them
for deficiency judgments on these types of properties.
But more importantly, where I found that many people ran into problems
is that they've been collecting their cash in their stocks.
All right.
So these assets here, they were holding in their individual name.
And so some of them did a really good job at protecting their real estate.
And so maybe they lost a property or two in the crash.
But what happened is that each of these loans
that they had taken out, they signed a personal guarantee on.
And this is one of the reasons why I oftentimes
tell people, you look at non-qualified mortgages versus qualified mortgages,
because when you're working with qualified mortgages like a Wells Fargo
or a Bank of America, someone like that, or your broker,
you're always going to be asked to sign
a personal guarantee on your investment loan.
But when you go non-qualified mortgages, you can typically work around that,
not have to provide a personal guarantee,
meaning that if something like this happens,
you're not going to be liable for the difference, not person liable.
The lender can only look to the asset itself.
Now, in this this scenario where most people are in qualified mortgages
and there's a deficiency judgment entered against someone
for, say, $300,000, and it could be worse than that.
I mean, I've seen situations where people's businesses started to fail
and they were in long term lease agreements.
And then the lessor came after them for the remaining portion of the term.
And so these types of judgments can create havoc in our lives.
What you want to be looking at here is
are these assets that sit over here, your liquid accounts, your stocks,
your savings account,
those you don't want to have a big checking account balance in your own name
because these assets right here is what a creditor is going to latch on to,
because all they need to do, if they get a judgment against you,
is they can go down to the institution
where you actually have your money and file
what is referred to as a writ of garnishment.
And that implies or what it means is that the institution now
will hold those funds.
And for the creditor and they will not pay you
any of the money until that judgment is satisfied.
So the way you protect this is you take these types of assets right here
and you put those in an LLC.
I typically like to put these in a Wyoming
limited liability company, so I get these out of my name.
And then the other area where people start running into issues
is their investment property.
If the bank came after them and got a judgment against them,
then their investment property right would then turn into a lean
on their personal residence because their personal residence was in their name.
So you should focus on taking your personal residence,
getting it out of your name and putting it into a land trust.
Okay.
With a nominee trustee so your name doesn't appear on there.
So you want to use a nominee trustee for your personal residence.
So at the end of your structure, you should have very few assets
or any title assets remaining title assets that exist in your name
except a personal checking account.
And that should not have a huge balance.
So if you're concerned about a possible crash coming
and what the implications may be for you, for your business in working with lenders
and working with maybe a lessor or something like that,
you need to be taking steps now to get this stuff set up because
at the point in time when it happens and it rolls up on you, there's nothing.
Someone like my Anderson could do for you at that point in time.
This type of planning has to take place earlier, sooner rather than later.
So, guys, these are just some of the things you ought to be considering.
One last point and throw out there.
If you have a self-directed IRA or an IRA and you have to live in a state
that does not recognize protections for IRAs, you may want to consider
setting up a solo 401k plan, set up a business and put a solo
for one K of that business.
Roll your IRA money into the 401k plan.
Therefore, you can pick up protections under ARISA
to keep those assets protected from a creditor.
Now, there are only a handful
of states out there that don't provide protections for IRAs.
If you're not familiar with those states,
check out one of my other videos on my channel where I discuss asset
protection IRAs, and I believe Mark called in the show notes itself.
I have a list of those states where you that you should watch out for.
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Take care.