Where and when to incorporate?

Question

Hi.  I live in NJ, and I'm looking at buying a rental or two in upstate NY.  I haven't formed an LLC yet.  I think it'll be best to form one per property owned, but does it matter which state I incorporate in, NY or NJ?  Should I maybe incorporate in a different state altogether?

Also, I can either finance or pay cash and then refinance.  (I would consider the second option just to make the transaction go quicker.)  If I finance, should I form the LLC and then apply for the mortgage as the LLC, or should I get the mortgage in my name, make the purchase, then form the LLC, and transfer title?  What about the second option?  If I pay cash, does it matter whether I form the LLC and then refinance as the LLC, or should I refinance first, and then form the LLC?

Sorry if I seem confused.  It's only because I am.

And finally (for now), can I have the property in the LLC name and the mortgage still in my name?  Is that advisable?

Jon Holdman · Answer

Form the LLC in the state where you have the property.

Bill Bronchick's "Wealth Protection Secrets of a Real Estate Investor" is a good intro to these topics.   If you really want to get this all right, you need to find a knowledgeable lawyer.

Dave Versch · Answer

Rich,

I have enough assets to where it's a cause for concern.  Does it matter whether I incorporate in NY or NJ or any other state?

Rich Weese · Answer

Amen to Jons' post. An LLC only protects you from something happening on or in that property basically. If you are the beneficiary of the LLC and you do something bad off the property, a judgement will still get you. Consult a good estate planning attrny and find out other options.
    An LLC does not make all the bad go away, imo.

Rich Weese · Answer

I'll try to tackle this one.
1. LLC may not be neccessary yet. An LLC doesn't protect you from very much. Do you have a lot of assets? That would make a difference in what you should consider.
2. I would finance to begin with- re-fis are more difficult currently.
3.Property can be deeded to an LLC anytime.
    That answers most of it, I think.