Investor · Indianapolis, IN · Member since 2015 · 80 posts · 82 votes
Are there any BP Kansas City investors who can recommend a good real estate attorney. I would also be curious what makes that attorney good - personnel interaction, expertise with investors, etc. As background, I am an out of State investor looking to invest in KC turnkey properties. I am seeking to establish an LLC in MO for liability protection (separation of person wealth/stuff from real estate investments). I will also carry an umbrella insurance policy. As I am a new I will also consult with the attorney to review contracts and whatever else arises. Any comments would be greatly appreciated
I did it right on the Missouri State website https://bsd.sos.mo.gov you probably could also do it through Legal Zoom or other sites like that etc
For Missouri It's a one time fee of $50. You don't need to ever file anything with them again or pay any additional yearly LLC's fees after you create it( unless they change that). This is for single member ... I don't know what it's like for 2 or more member LLC's as I didn't check that out. You can then go to the IRS website & get a FEIN number for your LLC (really easy ) as you will need this to open a bank account. And the only other thing you need is an operating agreement which for 1 member LLC is pretty straightforward. You'll have to email that when to the title company when you go to buy or sell ...also your articles of organization which you will get emailed to you from the Missouri state online right after you file. I can send you my operating agreement if you want to just copy it (and change out names & dates ) or sure you can find a generic one online.
FYI I had a lawyer form my first LLC for me and he filed for me to have a business license which I didn't know he did & it created issues for me. After all the aggravation the deal is if you are managing the properties yourself then you are suppose to have this business license. But if you have a professional property manager ( and they have this business license ) then you don't need it. Something to keep in mind of you go the lawyer route as that was a major pain for me & had to have my PM go downtown & clear it up for me as I was facing fines from the city & I would up having to file a tax return special to the city even though I didn't owe them anything. Definitely ask the lawyer about that license if you go that route... I had no idea I even had one.
If you're creating a single member LLC you can do that online. It's pretty easy for Missouri. Just a one time fee and you don't need to file anything else or pay anything else after that.
I did it right on the Missouri State website https://bsd.sos.mo.gov you probably could also do it through Legal Zoom or other sites like that etc
For Missouri It's a one time fee of $50. You don't need to ever file anything with them again or pay any additional yearly LLC's fees after you create it( unless they change that). This is for single member ... I don't know what it's like for 2 or more member LLC's as I didn't check that out. You can then go to the IRS website & get a FEIN number for your LLC (really easy ) as you will need this to open a bank account. And the only other thing you need is an operating agreement which for 1 member LLC is pretty straightforward. You'll have to email that when to the title company when you go to buy or sell ...also your articles of organization which you will get emailed to you from the Missouri state online right after you file. I can send you my operating agreement if you want to just copy it (and change out names & dates ) or sure you can find a generic one online.
FYI I had a lawyer form my first LLC for me and he filed for me to have a business license which I didn't know he did & it created issues for me. After all the aggravation the deal is if you are managing the properties yourself then you are suppose to have this business license. But if you have a professional property manager ( and they have this business license ) then you don't need it. Something to keep in mind of you go the lawyer route as that was a major pain for me & had to have my PM go downtown & clear it up for me as I was facing fines from the city & I would up having to file a tax return special to the city even though I didn't owe them anything. Definitely ask the lawyer about that license if you go that route... I had no idea I even had one.
Welcome :) btw my properties were in Kansas City ...Jackson county .. Other areas maybe different with the business license requirement. Also forgot to mention that a single member LLC is considered a pass through entity on your taxes (unless you choose to have it taxed as a corporation) so you just file your taxes as usual & don't need to file anything special. So doesn't really cost but the $50 to open the LLC. The only down side is sometimes the lending is different to LLCs verses having in individual name but I haven't found that to be much of a problem.
I have houses in Jackson County, MO as well. Would like to find a lender to refi out of my existing mortgages from my personal name to my LLC. Do you have any lender names I could look into that lends to LLCs?
@Dawn Vought I have used and like Bank 21 ...Tyler Knotts is the guy I go through. I also just heard that Arvest Bank (Eric) is good as well but I have not tried them personally. Many of the asset based lenders like B2R will also have no problem loaning to LLC's although their rates are higher than the local banks.
Although I may be biased as an attorney, I would not recommend using standard form incorporation documents found through governmental websites. These are generally the lowest, minimum requirements a person must meet in order to start doing business in the state. The standard forms do not take into consideration any number of personal factors that are dependent on your personal situation and the type of investments you are going to be dealing with. The standard forms may expose you to extra liability in both taxes and premises liability that could be avoided through consultation with a licensed attorney in your state.
As for how you should go about finding one of those attorneys; There are two majors sources; Website likes AVVO that allow people to search for attorneys in their area, or through your state's Lawyer Referral Service, which typically requires a one time fee for an initial consultation with an attorney.
It is definitely worth, from my professional opinion, seeking out an attorney to help incorporate. You may be saving money up front by opting for standard forms, but it won't be fun when that first tenant or succesor in interest drags you before the Circuit Court.
@ Laura Williams - thanks for the reply, I will take a look at the MO state website.
@ KeithAnderson - I will be investing using leverage, the typical 20/25 percent down. I am curious about why that question. I am guessing if I am investing all cash I am more exposed, but let me know if I am missing something.
@ KeithAnderson - I will be investing using leverage, the typical 20/25 percent down. I am curious about why that question. I am guessing if I am investing all cash I am more exposed, but let me know if I am missing something.
Like you, I'm a new investor. But as I understand it many lenders will not lend to LLCs. I've always seen asset protection discussed as a choice between an LLC or an umbrella policy; I can't recall seeing discussion of both at once.
Don't read my question/comments as concluding your plan isn't sound. I'm researching myself and just wanted to compare notes.
@ Keith Anderson - yes, I have heard the same thing regarding lenders not being keen on lending to an LCC. I haven't crossed that hurdle as I am only in the prequalifing stage, but I will be making sure the lender knows, no one likes those types of surprises.
Regarding the LLC yes it is a bit redundant, however, the cost of establishing an LLC in MO is not like California. My thought is if for some reason I am found negligent - which I really hope I would not make decisions that put me int that position - the LLC will split out the investment properties from personal stuff and the umbrella policy may further protect me, which may ultimately allow me to keep my investment properties.
I open this to other BPers to comment if my logic is off. You will be educating to curious individuals.
I am in St. Louis MO and could refer you to my attorney if you would like. He works across Missouri and is focused on real estate. Not cheap but I trust him implicitly. Email me if you would like his contact information.
Banks dont like LLC with no track record. The LLC prevents the bank from being able to consider any of your personal assets and income and limits the assets they could attach in a judgement. The limited liability benefit to you makes it unattractive to lenders.
Regarding Arvest you will likely need to go commercial side for llc. If you have securities that you can transfer into their wealth management branch they can consider giving a line of credit with collateral being your own securities. At least this is what i have done after doing many loans with them.
I use the Klinkenburg Law Firm. Google it for contact info. He is a real estate broker as well as attourney he knows real estate. Good rates but no supporting staff nor much infrastructure. He also does not handle evictions but I do have a couple other names for that.
@Dawn VoughtI had a great experience with Arvest bank on a house that I sold in Kansas City. They did a loan for the buyer on a deal no other lender would ever do. I do not know if they lend to a llc entity. It is worth it to contact them as they deal a lot with investors.
@ cliff Harrison - thanks for the recommendations regarding the lender and attorney. I will look into both entities. Glad to hear you are having success with both. Their solution of placing securities through them looks like a nice bridge.
@Gordon Cuffe - thanks for the additional datapoint on Arvest. Sounds like a good company to further explore. Let me know if you have other recommendations. Glad to hear you just finished up a closing. congrats!
I use Mark Klinkenberg, it was a flat $500 to do a brand new LLC in MO. I have a partner so we had a custom shareholder agreement and he handled it with no issues. He is a full time realtor as well, so his response time is not immediate, but he consistently meets my expectations.
I would recommend having an attorney set up your LLC. Google "piercing the corporate veil". The $50 online LLC, although cheap, is not getting you what you really want and that is proper protection from being sued by a tenant. Much like insurance, you pay for what you get. Good luck and take care.
KC
Good advice all around. To summarize what I read, figure out how you are going to operate (single member or multiple) and then create the proper LLC. If single, the online site at MO or LegalZoom will suffice. If multiple members, then seek advice of an attorney.
As far as financing, I work with Eric Kolseth from Arvest. He can finance as a personal entity with decent rates for 30 years and then retitle later in the LLC. Otherwise, you are stuck with a commercial loan with a 5 or 10 year rate lock and we know where rates are heading.
Also, I have a great insurance agent who can put all properties onto one policy with $2 m liability to give you a good hedge of protection from scammers.
If you retitle as LLC, you're technically breaking the lending agreement. And Arvest can't guarantee that they won't call your loan when rates go up and they want to get all those low rate loans off their books. Then you're stuck trying to get an LLC loan at super high rates in 3 yrs