Start my LLC in my home state or property state

9 Replies

I’m just starting out in the real estate investment world. I live in New York and I’m looking to buy property out of state. My question is...do I form the LLC in my home state or in the state in looking to buy he property. I know I’ll need a registered agent at some point. Thank you in advance.
@Darnell Eason - I have never used PO Boxes/Virtual addresses for any of my LLCs but I know some states wont register an LLC without a physical address. RA costs usually $125/yr and is fully tax deductible so I dont think its a big deal. If you have a prop mgr in the state you are buying the prop in and after you have a good relationship with him/her you can use him/her as your RA if you want to save that yearly expense
@Quynh Lan Nguyen - Yes or you will have to foreign register your LLC from one state into the oter state. E.g if you have an LLC in MO you want to hold a rental in TX you will have to foreign register your MO LLC in TX Depending on the size of your portfoilo and equity in your rentals your attorney should be able to suggest the best entity structure for you Hope that helps
@Darlynn Bailey - 1 LLC for 1 house is obviously the best asset protection option. Having said that you dont necessarily need a LLC per rental. You can if you want to and if you can afford it but it could be an overkill depending on the assets and the equity you have in those propweties. I have 4 of my rentals in MO in a single LLC but they are all 80-100k rentals. I wont include an asset that has say half a million in equity in that same LLC or another LLC thats holding sec 8/c class rentals While starting out I‘d say focus more on the deals and acquistions over being too obsessed about asset protection.

Out of state LLCs must register with the SoS as foreign entity if they "do business" in Texas.  Don't worry, there's a definition on the website.  Technically, buying or selling real property is not "doing business", neither is leasing or letting property.  

However, foreign LLCs cannot bring a suit without registering.  And eviction is a lawsuit.  You can defend a suit, but won't be able to bring your own claims in that case.

Even if you don't register, you don't have to have an address in Texas.  You can keep your NY box.  As a last resort, TX SoS will be your address in TX.  That office will forward to your NY SoS to deliver to the address you have on file in that state.

Adjust your business model accordingly.