Rehabber · Camarillo, CA · Member since 2011 · 32 posts · 1 vote
I would like to start the process of forming an LLC. I have doing a some research but there is a lot that I don't know. Should I contact a cpa or an attorney for help in drafting the necessary documents? Or both?
I will be purchasing rental properties. I have read that you should only have a certain amount of equity in an LLC so as to protect yourself. And that when that point is reached, to just make a new one. Is this true?
Also, will I come across some issues regarding financing as well if I purchase through an LLC?
SFR Investor · Orange County, CA · Member since 2009 · 1k+ posts · 1k+ votes
15y
First off, where do you plan to purchase your rental properties? If in California, each LLC will cost you $800 annually, so don't worry about forming any LLC's until you are very close to making a purchase. If you plan on buying out of state, you will most likely want to form your LLC in that state. Talk to an attorney who specializes in entity formation, especially for holding investment property.
Real Estate Investor · Milwaukee, WI · Member since 2008 · 1k+ posts · 671 votes
15y
You will have to deed in an deed out to finance if it is not commercial. Under 4 units = residential.
It depends what state you are in. In WI, you can form an LLC online through the state website for $130. I keep every property in its own LLC. This is best if you can afford it.
To see what is right for you, talk to a lawyer, cpa, and insurance agent.
This topic has been talked about hundreds of times... Search for it and see comments.
SFR Investor · Orange County, CA · Member since 2009 · 1k+ posts · 1k+ votes
15y
First off, where do you plan to purchase your rental properties? If in California, each LLC will cost you $800 annually, so don't worry about forming any LLC's until you are very close to making a purchase. If you plan on buying out of state, you will most likely want to form your LLC in that state. Talk to an attorney who specializes in entity formation, especially for holding investment property.
Residential Real Estate Agent · Costa Mesa, CA · Member since 2008 · 1k+ posts · 380 votes
15y
This has been discussed ad nauseam in a number of different threads. Just make sure that you're working on buying good rental properties first and taking care of the entity formation second. It's easy to miss the forest through the trees.
Philadelphia, PA · Member since 2011 · 155 posts · 124 votes
14y
Hey Andrew, LLC formation is certainly cumbersome in the beginning. There is a lot to research and it is hard to tell what is needed and what is not needed. [solicitatlon removed]
Flipper · Chicago, IL · Member since 2012 · 24 posts · 8 votes
14y
I have always used document preparer services like legal zoom to quickly form LLC's, of course if you plan on making them so routine (ie for each property) I would research lowest cost options as you could simply form out the work the same way a document preparation service does.
Real Estate Investor · Gobles, MI · Member since 2008 · 10 posts · 4 votes
14y
Having a separate LLC for not only each property , but other personal property items aswell protects each from liabilities of each other. This strategy is great.
LLC's are a hybrid beast and the way they are taxed varies by organization. One member can be filed on personal taxes sch C. Multi member requires Partnership 1065 aswell as sch k's for each member. Some can even be taxed as a corporation. Make sure you file LLCs "informational" tax return by the deadline. The reason i say informational is that a LLC is a pass through entity. The company is not usuallly taxed but rather poritons of profits and losses are passed to the members according to their proportionate ownership percetages. Then the members claim these by attaching the sch K-1 they recieved from the company.
Also the degree of limiting personal liabilty can also come into question depending on the manner in which the LLC operates. Is it truely a separate entity? or merely an alter ego of the person whom formed it.
I am sure this varies from state to state , but, here you can get basic forms from DLEG and file a none specific LLC that operates in any manner that a LLC may legally be formed for. No need for attorney or any other proffesional to file.
Michigan
The Costs $50 for normal processing ( ie no rush formation)
Annual statement cost $25
Real Estate Investor · Bellingham, WA · Member since 2008 · 407 posts · 90 votes
14y
Other than Nevada and Delaware I have found filing LLC papers in Washington State to be quite easy and can be quick if you pay the extra fee. You don't need a registered agent which will save on costs. The first one is always the most difficult.
California I have heard is one of the most expensive and you will require legal help.