Can an LLC formed in one state buy property in another state?

Question

I am currently a realtor and also looking to form an LLC in the state of Maryland. Can I buy property in my home state of Ohio using that Maryland LLC or would I need to form another one in Ohio?

Travis Timmons · Answer

The best structure for what you need is a series LLC. My attorney refers to that as a filing cabinet entity. You set up the "master" LLC in your preferred state and then put individual, local LLCs within the series LLC - like files in a cabinet - in the state that you own the property. You'll need to have a registered agent in that state, but there are loads of companies that offer that service for a very low cost.

Sean O'Keefe · Answer

@Marcus Amison an LLC incorporated in Maryland can buy an investment property in Ohio.

Should you structure your real estate investments like this from tax and legal perspective? This is the question you should be asking.

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*This post does not create a CPA-client relationship. The information contained in this post is not to be relied upon. Readers are advised to seek professional advice.

Timothy Murphy III · Answer

Typically yes you can do this. You can either form an LLC in the state where you're investing, or you can register the foreign (meaning out of state) LLC as a foreign entity with the state where you're investing. At least for Ohio, it typically makes more sense to form an Ohio LLC, but plenty of my clients use LLCs from other states for Ohio holdings too.

Russell Brazil · Answer

You typically need to register the llc as a foreign entity in the state you want to do business in.

Carl Stenberg · Answer

Typically, yes, but if I may ask, why form an entity in Maryland when buying property in Ohio? I see many investors form a Holding company in their home state and then set up out-of-state entities in the state where they're doing business. However, clarifying the long-term business objectives/strategy is key before finalizing your entity set-up. It also makes things easy when you have a system in place for scaling your portfolio.

Kevin Sobilo · Answer

@Marcus Amison, that is a question for a real estate attorney in the state you intend to buy property in.

However, I do believe its possible. I believe you are supposed to register your out of state LLC in each state that is does business in though. There may be costs associated. I'm not sure if it makes taxes more complicated or different either. I'm sure there are several factors to discuss with a lawyer.

Marcus Amison · Answer

@Kevin Sobilo thanks. I will consult an attorney for clarification.

Tal Shachar · Answer

Hi @Marcus Amison,

** Not a lawyer, only my point of view ** -:)

Keep in mind that if something happens with the tenant (e.g. you need to evict them), owning the property by an LLC from a foreign state may not allow you to act on them. I suggest you check that with your local/home state lawyer.

Good luck!

Martin M. · Answer

@Marcus Amison

Speak with an asset protection attorney about what you're looking to do. You may not need an LLC at all if just starting out and insurance might get you all the coverage you need.

That said... it's common for properties to be held in an LLC that's in the same state as the property itself.

Regarding OH specifically, some good info on the OH secretary of state website:

https://www.ohiosos.gov/businesses/information-on-starting-and-maintaining-a-business/starting-a-business/

Scroll down to...

Guide to Starting a Limited Liability Company in Ohio

Can an LLC formed in one state buy property in another state?

Can an LLC formed in one state buy property in another state?

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