Operating Agreement Template

[Mandhir Hazuria]

Hi,

I'm a new REI, looking to buy my first few long-term rentals in the next few months. While as a starting investor I know some might feel there is little need to have a LLC structure setup (WY holding company, local state LLCs, etc), I'd like to get some basic structure setup as part of learning.

I'm in analysis paralysis when looking at firms that help with business entity structures and formation. NCH Inc, Anderson Business Advisors, Prime Corporate Services, etc? 

Is there an operating agreement template from these firms that someone can point me to or share an example with me? (for a single member LLC)

Similar request for a land trust if available as well. 

[Mike A.]

Quote from @Tony Bacon:

Quote from @Mike A.:

It's best to have really good insurance. Then, on top, a nice umbrella. Each of our res. properties have 1m GL. Our mixed-use have 2m GL (1m e.o.). We also have a 5 million excess blanket policy on top of that. Lastly, they are in their own LLC's, owned by two entities, and we do not comingle the funds.

Delaware was once suitable for LLCs, but the laws have changed slightly due to recent Chancery Court rulings. The old theory was that you have your properties in one state, and then the LLC's in the other state (I.E. Delaware, Nevada, Tennessee, etc.). So, in theory, they'd sue you in the state where you operate, but they cannot truly enforce that on the LLC w/o also suing you in the state where your LLC was formed (I.E. Delaware). Delaware used to be very friendly to businesses, but this has changed over the last decade.

The best defence is good GL insurance and excess liability insurance.

When you have assets/equity/cash/securities north of $10 million, then you can look into trusts for additional protection.  The idea for trusts, preferably irrevocable and Domestic Asset Protection Trusts, can add significant protection to your overall assets, but they can be costly to form and operate.  

You can do this within the LLC's by using parent and child LLCs. When you need to transfer cash to another LLC, you can create a "loan" from one LLC to another with a nominal interest rate. One, which can also be deferred until the loan is called.

I feel like I am rambling, so I will end with this. I am not a practicing lawyer or accountant, so please check with the lawyers and accountants in your state. You are smart to want to plan now, but the keep it simple silly method is best.

1) If possible, purchase within an LLC

2) Get good insurance with high limits. A+ rated and admitted insurance carriers only.

3) Get umbrella or excess liability insurance.  If you are starting out, you can just add this to your auto policy.  If you are buying a commercial or mixed-use building, you may have to have a separate excess liability policy.

4) Don't comingle funds.

Worry about the other stuff later.

Seems a little complex for a first llc...

Agreed 100%. Just giving detailed options. If the OP files the LLC online, they should give him an operations agreement to complete. No need to pay an attorney for a Blumberg form.