LLCs For The Real Estate Investor

Real Estate Investors…Can An LLC Create And Support Tax Deductions?

Albert Aiello, CPA, MS Taxation, RE Investor

Yes! But first, if you have not done so, set up a limited liability company (LLC). Then elect the LLC to be taxed as a partnership (with at least two members) so you have an LLC-Partnership which is both a legal and tax entity (with a low IRS audit profile) and the best entity for real estate. If you operate as one person, another member (to create the partnership) can be your spouse, other family member or even another entity you own such as a C-corporation. These can be minority low-percentage members so you can still have total control. Kathy Kennebrook would totally agree that an LLC is the way to go.

Now to the topic at hand. Properly structured, with the appropriate documents, an LLC can support expenses as tax deductions, many of which are IRS hot spots (discussed shortly) and typically would be more aggressive if taken as a non-entity sole proprietor (which is also very prone to IRS audits).

What to do: Use a properly worded comprehensive LLC Operating Agreement (OA). There are several important LLC legal documents. But the OA is the most important one.

The Operating Agreement is the nuclear, governing instrument…mandating LLC business operations. Simply put, it is the heart of the LLC!

The OA is also a private document, not exposed to the public such as the articles of organization. The OA used, should be a “Real Estate OA”, specifically designed for real estate investment operations.

A properly worded OA will contain legal provisions that document the LLC is a separate entity where the LLC affairs are separate from the affairs of the members. These legal provisions (along with entity formalities) will give its members limited liability protection, therefore making it difficult for a court to pierce the LLC entity veil (which would expose member personal assets to attachment). This is because the LLC would be separate and distinct from its members.

ALERT: Standard boiler-plate OA’s (which most are) do not do this, as well as not doing below.

Tax Deduction Support: A properly worded Real Estate OA also supports the multitude of tax saving expense/deductions (and strategies) that are available for the absolute best tax shelter – real estate. That’s why Kathy Kennebrook uses LLCs in her real estate investing business.

How Is This So? Because having the correct legal provisions in the OA (per the above) separates the LLC entity from its members, as a separate legal person. So given this, the statutory LLC entity (separate from its members) via this legal document (the OA), formally authorizes LLC members to incur expenses necessary to attain the specific business purpose of the LLC as provided in the OA (which purpose is: High-return, low-risk real estate investing). This is summarized below.

__The LLC Entity__ You as LLC Member
Gives legal authorization to incur expenses necessary to attain the LLC business purpose S
e With the LLC authorization, you incur the authorized deductible expenses, carrying out the LLC bus. purpose

This is powerful! You will feel much more assured and comfortable that your tax deductions are legally supported by this legal entity (LLC) via this legal document (OA).

IRS Hot Spots: This is especially so with IRS hot spots such as deductions for auto, home-office, entertainment, meals, travel to find property; and especially real estate education (seminars, home study courses, coaching programs) along with related travel to the educational event.

With the proper LLC documents, you can legally and fully claim such deductions, even if you do not yet own any investment properties and save thousands! This could be a very troublesome area with the IRS…but now can be resolved with a properly structured LLC entity with complete, correct documentation!!

Conclusion-Summary: Such proper documentation can therefore be an effective defense against any IRS attacks; or CPA’s trying to deny you of valuable deductions. Reason: This statutory LLC entity (separate from its members) via this legal document (the OA), formally authorizes these deductible expenses necessary to attain the LLC business purpose. You end up with legal tax-saving deductions and a more successful real estate operation…The best of both worlds.

The above are excerpts from The LLC Master Machine – The complete updated LLC system for real estate investors (including a comprehensive 121 page RE OA) by Al Aiello and Wm. Noll, Esquire. For more info go to Kathy Kennebrook’s website at

Creating a “Cookie Cutter” Direct Mail Campaign

Direct mail “cookie cutters”

The best way I’ve found to “niche” market to motivated sellers and control the number of leads coming in is through the use of direct mail. The BIG secret to making direct mail successful is to mail the right letter to the right list; then mail to them over and over. As you will discover, given time, almost every potential seller’s circumstances change and make them more motivated to sell. You must let the world know you buy real estate. The best thing about doing direct mail advertising is that you can specifically target the types of sellers you want to reach and cultivate quality leads.

I also find these mailings to be very residual. These potential sellers will hold onto your direct mail pieces until their circumstances dictate that they contact you. When they are ready to sell, they will contact you first, especially since they probably haven’t had any contact from anyone else. Usually their properties aren’t being actively marketed; therefore there is no competition for these deals. In the meantime, you’ve gained credibility with these sellers by doing repetitive mailings.

I will take a moment here to mention that one of the reasons I personally love direct mail is because it is unique in that there is no other marketing technique out there where you have the kind of control that you do with direct mail. For example;

1. You can cultivate the exact type of lead you are looking for in the
specific area or price range you are looking for.

2. You can control the number of pieces going out, when they go out,
and specifically to whom they are targeted.

3. You can create a response mechanism within the body of your
letter so that you get the specific response you want from the seller or customer.

4. It is very easy to “crank up” your mailing machine or pull it back
depending on what your personal situation or goal is.

5. You can create more solid leads using fewer of your marketing
dollars thus leaving you more dollars for other marketing you might want to do.

6. You can create a solid successful direct mail campaign even if you have a very limited budget to work with.

7. It is very easy to track the success and response rate of the direct mail campaigns you have created.

8. These mailings are very residual, potential sellers or customers
will hold on to them until they need your service.

9. You will reach prospective sellers or customers who might not
ever learn about you otherwise.

For more information on using Direct Mail to increase the number and the quality of real estate deals you do visit Kathy Kennebrook’s website at  While you’re there be sure and sign up for Kathy Kennebrook’s free monthly newsletter.

Website Update

Be sure and visit Kathy Kennebrook’s website at for all the information you need on Kathy Kennebrook’s products and other products aimed at increasing the number of motivated sellers and buyers you need for your real estate investing business.

While you are there be sure and sign up for Kathy Kennebrook’s FREE monthly newsletter and get 149.00 of additional marketing tools absolutely FREE as soon as you get signed up. See you there!!

New Motivated Seller Lead Resources From Kathy Kennebrook

Kathy Kennbrook has been working with Lance and Terry at USLeadList for over three years now and they have always been consistent with their approach and business model. Something we all need to do to be successful. Direct mail marketing takes persistence, but it works. It is the easiest way to reach your target market and if you have a very good list like the “Inherited Properties” list from USLeadList, you are reaching a very targeted market that is typically under the radar.

Kathy Kennebrook successfully mails to the new list they provide every quarter and she gets consistant deals from these mailings using this list and her Marketing Magic Direct Mail Campaigns.

Lance and Terry have provided a quick note below that shows the value of persistence and consistency. If you have never tried their services you owe it to yourself to check them out. You won’t be disappointed. If you would like some more information, please give them a call at 866.711.1688 or visit for a free quote.

Remember to mention the “Kathy Kennebrook” for a Special Discount she has negotiated for you off the retail price.

As Lance likes to say, “this is not 7-Eleven.” What he is trying to convey is that direct mail marketing is not automatic. You just can’t walk in and expect to buy a house with just any list. It’s just not going to happen and it may take more than one mailing to find those “special” deals.

Kind of an odd opening paragraph for a company that sells a very targeted list of “Inherited Properties” to real estate investors that can’t afford to take a misstep in their marketing. That is because our primary goal is to help make you successful in your business. We are not going to tell you that this is the magic bullet every time. We are going to tell you that we have 4 years of selling this list with a whole host of success stories.

We absolutely believe that this is the best list available for the real estate investor and the testimonials below bear that out. Take a moment and read through each of them. You will see that some profited with their first list while others had to stay the course and be consistent with their marketing. Which, of course, is the whole point — be consistent. It will bear fruit. We know that funds are tight so use them to the greatest potential just as Kathy Kennebrook teaches you to do.

Because ours is such a targeted list you reach sellers that are motivated and with equity and with less expense. That’s right. When you are using a directed mailing campaign you save on postage, letters and envelopes and the time and energy it takes to put it all together. We want you to succeed.

Here are the testimonials (All received this month and all are current customers):

I began buying leads from US Lead List a little over a year ago. I was extremely skeptical in the beginning, in fact I remember Lance having to follow up with me multiple times before I took the leap and purchased my first list. I did not buy anything off the first or even second list. I had to practice taking the leads and working with the homeowners until I had it down to an art. I continued to have faith and buy the list as I was getting a 4.5% response rate. I am glad I did since I bought 3 properties off this last fall list. I wholesaled two and put one into my permanent portfolio. I have now added additional counties from US Lead List and have started taking in leads from the winter list. These sellers are motivated and have equity—what else can you ask for?
Dan R.

Hi Terry and Lance,
Just want you to know that I had good success using USLeadList. I mailed out over two hundred letters and after a week I was receiving several calls a day.
I’m guessing that my response rate was around fifteen percent. I have a property under contract. The elderly lady is happy not to have to list her house with a realtor, and after some updating, I anticipate making a minimum of $30,000 flipping this property.
Thanks for all your help.
Emma (Her first list)

Terry & Lance –
Thank you for your excellent service and the personal attention you always provide. We have been using your list for almost two years with great results. It is an important part of our marketing efforts.
Linda T. & Pat F.

Lance and Terry,
We just want to say thank you for the incredible list you provide which allows us to buy an additional 2 to 3 houses every quarter. We’ll be honest, we were skeptical at first to try your list because of the price per lead, but now we realize that the cost of the list is nothing compared to the return we get. In 2010, we easily made an additional $10,000 every quarter because of your service. As long as you continue to provide quality leads, we will continue to purchase them every quarter. This is by far the best list we’ve ever used to purchase distressed properties and any person who is serious about buying houses needs to be purchasing leads from you. Thank you for your hard work and giving us the opportunity to become better real estate investors.
Eric B
My Fast Home Buyers, Inc.

What more do you need? Give us a call today at 866.711.1688 or visit for a free quote or for more information. Make sure you mention Kathy Kennebrook so you received the Special Discount she has negotiated for you, her customers.


Lance and Terry

Land Trust Tele-Seminar With Larry Harbolt and Kathy Kennebrook

This Year One in 12 Adult Americans Will Be Sued.
Will You Be One of Them?

Do you currently own all of your real estate assets in your own name, because if you do, any trip and fall person will easily be able to know where to fall and where to get easy money. Insurance fraud is a multi Billion dollar business! And what happens if Insurance doesn’t pay?

Do you lose sleep at night worrying about one of your tenants or their guests getting hurt at one of your properties and suing you? Or getting into a car accident and being sued?

Have you heard the stories about someone tripping and falling at someone’s property then suing for $50,000, hoping they will get $30,000 to go away? If you own real estate in your own name, this could be you. It’s a simple fact, there are more than 5,000 millionaires made each year by court awards. Many of those court awards will be from unfounded nuisance suits.

Do You Currently Have a Plan To Protect Yourself From Lawsuit Happy America or Haven’t You Worried About It Yet? Kathy Kennebrook has solved this problem and wants to share the solution with you.

Here’s the problem… When you own real estate in your own name you are giving anyone who is looking to sue and their contingent fee attorney a roadmap showing where your treasure is located making it easy for them to be able to quickly determine what your treasures are really worth.

Every property you own in your own name is recorded at the city or county courthouse where anyone can easily get your name and address. This is the treasure map anyone suing you will be looking for to know just how deep your pockets are. Do you want to be the person being sued, and that has made it easy for the suing party to know what you have?

Can you imagine the joy the person will have who is suing you when their attorney says to them, WE’VE STRUCK GOLD! Once the attorney knows what you have and what it is worth they will definitely pursue their case to the very end and you could lose all of your properties.

If you’ve ever been forced to pay someone who sued you and won the case, you know what an ugly feeling knowing that person that you are forced to pay probably doesn’t deserve the money they are getting while your family suffers.

In today’s world, there are plenty of people looking to sue anyone who appears to have money. But there is a simple solution to this problem any property owner can do.

Call In Number- 212-990-8000
Pin Number- 4705#

Join Kathy Kennebrook and Larry Harbolt Wednesday February 23, 2011 at 9:00 P.M Eastern. Larry Harbolt is going to explain to you how you can solve this problem and protect yourself from these scavengers looking to benefit from your misfortune. Larry is a master of how to use land trusts in ways others haven’t figured out yet. Larry is going to explain to you how the Land Trust can keep your name out of public records while allowing you to own as many properties as you want without the fear of losing your properties because it was easy to find out who the owner is.

Larry Harbolt has lectured to thousands of people nationwide and helped hundreds create their own land trusts. Larry has taught about land trusts for national guru’s as well as national real estate training companies teaching how to use the land trust to protect property owners as well as how to make more money from the properties they buy.

The information Larry Harbolt will share with you is what he calls the “Rolls Royce” of investment protection strategies. Investors in the past have spent hundreds of thousands of dollars to protect their real estate assets in ways others hopefully can’t figure out. This is information only a few elite investors have had access to. What Larry Harbolt is going to share with you is truly not available anywhere else.

Larry has cracked the code how to use the land trust for privacy as well as how to help thwart almost any adversary by keeping them paying their attorney hundreds or thousands of dollars while they chase their tail and confused. This is what Larry calls “Real Justice”.

Join Kathy Kennebrook and Larry Harbolt on Wednesday February 23, 2011 9:00 P.M. Eastern Time,

Larry is going to explain;

? The “4” Primary Reasons to Put Your Properties Into a Land Trust.

? The Simple Process How to Put Properties You Already Own Into a Land Trust.
? How the Land Trust Can Keep Your Real Estate Information Totally Private.

? Larry Will Explain Who Should Be Your Trustee and Who Can Be the Beneficiary.

? Why Attorney’s Are Confused By the Land Trust and How That Is a Real Benefit to the Investor.

? How Using a Land Trust Can Give You a Double Layer of Protection.

? How Simple and Easy It Is to Set Up a Land Trust.

? How to Save Thousands of Dollars By Doing Your Own Land Trusts.

Join Larry Harbolt and Kathy Kennebrook Wednesday February 23, 2011 at 9:00 P.M. Eastern to learn more about how to use these best kept secrets how you can better protect your real estate assets from Lawsuit Happy America and keep the assets you’ve worked so hard to acquire for your family, not for someone else’s family.
Call In Number- 212-990-8000
Pin Number- 4705#
This strategy could change your investing life forever! Be sure and dial in a little early since lines are limited and there will be no re-play of this call.