Hey BP Community!
I am gearing up to purchase my first rental property and I have a question regarding the best way to setup my business.
I am partnering with two college buddies of mine (one lives in Seattle, the other is temporarily living in North Dakota working for a big oil and gas company). I live in Portland and in trying to just take action and move fast, I had a member managed LLC created in Oregon and when I went to Chase Bank to open a small business checking account, they said that all of the members need to be present at the same branch if it is a member managed LLC. They suggested that I file an amendment to the articles to make myself a managing member of the LLC, and even in that scenario, the other two would have to go to their local Chase bank and fill out a form letting the branch here in Portland know that they are members that live out of state. This seems pretty cumbersome and have heard that others didn't have to do this.
I also wanted to know if you all put each individual property under its own LLC?
Long story less long, how is your real estate business set up? (ESPECIALLY if you have partners - not just using partnerships for deals, but actual business partners)
@Kevin Dickson we have an operating agreement that my lawyer drafted that lines out the fact that I am the managing member and in charge of day to day operations. This allows me to take action on the LLC's behalf without have to check in with the partners constantly. They receive monthly statements and distributions but presently have zero access to the bank account.
I have 10 properties. Many I hold in my personal name. 1 I hold in a wholly owned LLC. 1 I hold in a 50/50 LLC and several are owned in my partner's names with a side operating agreement established giving us ownership. If you are getting 3 partners together I strongly suggest have a vetted operating agreement that outlines decision making, accounting, exit strategies, etc. You don't want to be thinking about that stuff after it is too late.
PS - If your rental property is 1-4 units it is very unlikely you will be using a bank that lends to an LLC.
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