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Setting Up LLC For Real Estate Investing (Your 1st LLC!) - YouTube
Channel: Clint Coons Esq. | Real Estate Asset Protection
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- Hi, Clint Coons here and in this video,
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I am going to discuss the first LLC
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you should set up when you're looking
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to invest in real estate.
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So with that, let's get started.
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(upbeat rock music)
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- All right, guys, when
it comes to setting up
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limited liability companies there's a lot
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of information out there on the internet
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about setting up an
LLC in your home state,
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what type of LLC you should set up,
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Nevada, Delaware, Wyoming, you name it.
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So I can see how it can get confusing.
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But, here's what I want
you to think about.
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When you're going to create
a business structure,
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one of the first things
that I always focus on
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is keeping my name off a title.
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Or off of that business.
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Unless I'm willing to be out there,
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actively promoting myself,
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like ClintCoons.com,
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or you know, Anderson Business Advisors,
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where I want people to
know that I'm associated
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with that business entity,
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there is no reason why
you should have your name
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tied to your limited liability company
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that is going to own rental real estate.
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Recently, I was featured,
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I didn't know this at the time,
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on a segment on NPR where
they were talking about
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privacy of limited liability companies.
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And in this hour and a half long segment
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that did discussing the
fact that tenants cannot,
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in certain circumstances,
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find out who the owner of a
limited liability company is
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that actually owns the property,
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how troubling that is for these tenants
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who can't find out this information.
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Now, I didn't get quite get
the gist of the interview,
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or the NPR program,
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other than the fact to say
that tenants need to know
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who the owners of the LLC is,
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so that they can, what, harass them?
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I mean, if you have a legitimate claim
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you can always sue the LLC,
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you don't need to know
who actually owns it.
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But they were making the point that,
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yes, we need to know who owns it
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and that people, like myself,
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they took one of my videos
and an audio segment of it
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where I discuss using an amenity,
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these are the problems
that prevent tenants
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from finding out who the true owners are,
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because people can set
up entities anonymously.
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Well guess what?
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This is exactly why you should do it.
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Because you do not want
tenants contacting you,
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stepping into your life,
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creating problems, think on this.
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Let's say you had a tenant.
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And they're disgruntled with you
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because you evicted them,
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or you're about to evict them,
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or maybe they want a new refrigerator
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and you're refusing to do it
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because they want the
refrigerator with the ice maker
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and you say,
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you have a perfectly fine
working refrigerator right now.
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What could they do if they know about you?
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Have your personal information?
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Well, simple.
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They can get on the internet
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and just trash your reputation.
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What's to stop them?
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Nothing.
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They can create multiple fake accounts,
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start posting fake postings about you
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that other people will see,
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your friends, your business associates,
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future tenants, what
could that do to your job?
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You think you have any
legal recourse against them?
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No, you could possibly get a
temporary restraining order,
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but that's going to be
expensive and time-consuming
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and may not be granted
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because you don't have proof
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that they're the ones actually doing it.
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So it is for that reason,
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when you're thinking about
investing in real estate,
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I strongly encourage you
to create your structures
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so that people cannot discover
who the actual owner is.
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The way I go about doing
this is I typically start
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with a Wyoming limited liability company.
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That is going to be the
first LLC you set up.
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And the reason why you're
going to use Wyoming,
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is because Wyoming does
not list any information
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about the members or managers of that LLC.
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Now, the Wyoming LLC should
be used for residential
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real estate holdings.
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I'm about to show you
this in just a second.
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If you're going to use,
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if you're going to be
investing in commercial,
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multi-family, then I
would go with Delaware.
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And the reason why I look
at these two structures
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is because with Delaware
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you're dealing with a
different type of lender
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than you would be in Wyoming,
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where you have single family loans.
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So, there are different type of loans,
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different types of lenders,
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and so they look for different things
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when it comes to creating
these structures.
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So, the way we set this up,
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to protect your identity so
someone cannot discover you,
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is you first create
your amenity-compliant.
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We'll call it that, an
amenity-compliant LLC.
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This can be in Wyoming,
it can be in Delaware.
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Let's just go with Wyoming here.
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So I set up this Wyoming LLC.
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That gives me complete amenity.
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So I'm the manager, I'm
the member of this LLC
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but no one knows that its me
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because nothing's reported
to the Secretary of State.
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Then, when I go to create my,
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let's say,
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my Texas limited
liability company up here,
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here's the Texas LLC.
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Here's a Washington LLC right here.
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Then I'm going to have these LLCs owned by
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this one Wyoming LLC.
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So when you're creating them,
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after you've set up this
first base structure,
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because this is going to own all
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of your limited liability companies.
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You don't need to do this one-per-one,
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so you have a whole bunch of Wyomings.
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Just create one.
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It will be the member in all of these.
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The information that the Texas
Secretary of State's website
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will point to this company right here
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because that's what we'll going to list
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when we file for our Texas LLC.
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The name of our Wyoming LLC.
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So if a tenant, they're in
this Texas property right here,
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they're disgruntled
because you didn't buy them
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that new refrigerator they wanted
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that had the ice maker and
the water dispenser in it,
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and maybe the touch screen.
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So they decide, well, I'm
going to get back at you.
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Well, who are they going to get back at?
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The limited liability company?
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No, they want to go at you, the owner,
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to make your life uncomfortable.
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So if they look up the LLC
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on the Texas Secretary of State's website,
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it's going to point them to Wyoming.
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If they look up the Wyoming LLC,
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it's going to point them nowhere.
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This is how you build out
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your real estate investing structure.
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Now, this is on the residential side.
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If it was a commercial property
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and I wanted to build this stuff out,
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then this would be Delaware right here
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that I'd be setting it up in.
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So, keep your business affairs private.
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Do not allow people to discover
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that you're the owner of these entities.
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And a lot of times people say,
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well Clint, they're going to know it's me
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because I'm managing the properties.
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If you're self-managing, don't
tell them you're the owner.
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I mean, one thing's often said is
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that if you're dealing
with tenants yourself,
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and you're self-managing your properties,
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and you're talking to them
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and they're disgruntled about the owner,
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Well, heck!
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you can join them, say you know what,
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I think the owner's a real S-O-B myself.
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I just manage the properties.
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Guy never responds to me.
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So now you can kind of be one of them.
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And they don't know that
you own the property.
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So they may look at you differently.
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So this is how I go about
creating structures,
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it's very important,
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the first entity you
create in building out
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your limited liability company structure
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for real estate investing
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is going to start with
an amenity-compliant LLC,
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either in Wyoming or Delaware,
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based upon the real estate
you plan to invest in.
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(upbeat piano music)
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