What State to form my LLC?

Question

I live in New York but I am currently looking to invest in long-distance real estate, mainly in the Baltimore, MD area. I will be creating an LLC soon to begin holding my properties however I'm not sure if I should register it in Maryland, New York, or an "LLC-friendly" state like Delaware, Wyoming or Nevada. Also will I need a registered agent and does the agents address matter?

Kyle Mccaw · Answer

Great question for a local attorney. Biggerpockets posts will provide plenty of unlicensed/unqualified answers.

Nathan Gesner · Answer

You should be able to register your LLC in any state. Wyoming is extremely easy and inexpensive, but there are other states that are probably just as good. I registered an LLC a couple months ago and it took about 15 minutes and $200. That included creation of the LLC, all the legal documents filed with the state, and the forms needed to open a bank account. Procuring a Tax ID was a different process and another $50 I think. It's all registered through the local agent so my personal name doesn't show on any documents. If someone wants to sue me, they would serve notice to the registered agent and then it gets forwarded to me.

Mike S. · Answer

@Brian Davis

As a general rule you would want an LLC in the state where the property is located as it will need situs in that state to be able to act in court,

As some state have very low outside liability protection on their LLC it is recommended to have these LLC owned by a holding LLC in a good asset protection state. WY is often recommended for a holding LLC as they have excellent statutes, anonymity and reasonable cost.

But like all general rules there are a lot of exceptions that may be related to your specific situation.

I would recommend that you spend some time watching the YouTube channel of Clint Coons. You will find a treasure chest of excellent advices on how to structure your LLCs for real estate investors.

After getting informed, you should then consult with a real estate, asset protection and tax attorney(s) to discuss your specifics.

Philip Coiro · Answer

@Brian Davis

I’ve recently asked my attorney this and the answer was New York.

Valeria Guzman · Answer

@Nathan G.

Would you mind sharing the website. I am currently in the process of getting an LLC.

Jeff Wydra · Answer

@Brian Davis

Both Mike S. and Joe Norman here above make excellent points. You could start in your personal name and not sweat it to start. Then when you get some money rolling in and maybe a second property go ahead and open one. On the flip side when you do open one, my mentor always told me to absolutely open the LLC that holds the property in the SAME state. If you have to go through some litigation or get sued, and your LLC is from out of state, the odds are stacked against you and you'll likely lose. Again as Mike stated, you can have a second entity hold the first entity and have that one in another state where its best for taxes. This illustrates one of the many, many beautiful benefits of real estate where you can get your cake and eat it too. Hope all this helps and congrats on taking your first steps.

Joe Norman · Answer

If you're just getting started then consider purchasing in your personal name instead of as an LLC - financing will be much cheaper and easier to get.

Nathan Gesner · Answer

I just did a search for registered agents in Wyoming. I chose one that's in a small town that looks reputable and experienced and his price was low. It worked great. If you PM me I will share the website.

Brian Davis · Answer

Appreciate the help Nathan! How did you choose your registered agent?

Brian Davis · Answer

Thank you Kyle! I am in the process of looking for a real estate attorney in the area now.

What State to form my LLC?

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