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. Oh, we got something out of this video. If you like it, smash the like button. And if you're not yet a subscriber,
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every time I release another video. Take care.
