Rehabber here, trying to get private funding now as all my cash is tied up. Lenders are telling me they only lend in LLC's. I live in AZ, but invest in other states, so now my question is, if I must set up an LLC, which costs $1400 here for an attorney to do it, ( !! ) is an AZ LLC of no use if I never invest in AZ? Must I set up an LLC in the state I live, or in the state I invest in?
You can CREATE an LLC anywhere (read up on Nevada & Delaware), but must Foreign File in every state you do business.
Unless there's special restrictions in AZ, you don't need the lawyer and $1400 to create or foreign file - - you can do both yourself. You should do a lot of reading taking that approach, as the choices to be made must be understood.
I created an S-Corp and LLC in Nevada and Foreign Filed both in California w/o any special assistance.
The short answer is that you would want to set up the entity you want to invest through in the state you want to invest in. You'll want to talk to your CPA about the tax implications specific to that state(s) that may be different from what you're used to in AZ, and thoroughly discuss with your attorney the laws particular to filing in and operating in that state(s).
NA Beard wow now Im more confused than ever. I never heard of anything called "foreign file" and I'm so confused. Can I get funding for rehab projects in a different state than my LLC is formed in? Can I get funding in an Arizona LLC if the project is in Texas? Or do lenders want the LLC to be in Texas where the property is? I would be doing it for the benefit of borrowing money, not so much protection, as borrowing is my priority right now. I have 4 good projects I want to do all in the east coast, and lenders are telling me they only lend to an LLC. I still need to know, LLC in my home state or LLC in project state.
"Foreign Filed" is the legal name for having one state inherit the entity create in another.
If your LLC was not created where you are doing business AND is also not Foreign Filed, IMO you're in for trouble, but it's easily solved; go to the State's Sec of State's website and begin the process of filing.
Here's a pointer for the Calif Sec of State
Originally posted by @Brenda Whittaker :
@J Beard wow now Im more confused than ever. ... I still need to know, LLC in my home state or LLC in project state.
At least in the project state. More than one state, each also need to be filed one way or the other.
@Steve Haight thank you! I'm checking out their site now.
SO, looks like I need a TX LLC if my properties are all there. Even though I live in AZ. Right?
@Chris Mills thank you so much.
They also pick up a phone and you can ask them questions, they are very knowledgeable people, very good service. No I am not on their affiliate program.
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you