San Francisco, CA · Member since 2017 · 74 posts · 64 votes
Hi, this is a newbie question and i don't know if it's over-posted. I'm planning to buy more rental properties this year. And I'm thinking having a LLC structure to have more legal protection on my own and on my property. I'm solo and don't know any good lawyer, attorney, accountant or CPA to consult on this type of thing. So my question is: (1) Where can I find good people to help me in setting up the LLC? (2) Do I form an LLC before buying the property or after? (3) what are some good training resources about the ins and outs of LLC? (4) Do you form one LLC for each property? (5) How much does it cost to have LLC and how much is the consulting fee for accountant or lawyer?? ....and many more questions coming up...
Not sure if others will agree with me or not, but I have set up multiple LLC's through a company called Rocket Lawyer. I purchase my investments in the midwest and incorporate in Indiana. Rocket Lawyer has made every single one of these transactions painless and affordable. As a resident of San Diego, doing my investments out of state, I can appreciate not paying the high fees associated with this California.
I see this question so much that my RE partner and I (who is an attorney) are going to setup a service that does this for people in CA. It's a package deal that includes:
-up 2 hours of consult time with an attorney (my RE partner)
-all paperwork filed with the state of CA
-statement of information for state of CA
-all fees payed to the state of CA
-operating agreement for LLC
-articles of organization for LLC
-EIN
If you're brave enough to be our first client PM me! We're thinking that the package will be a fixed fee of $1495. It will only be for clients who need a CA LLC.
According to my partner, who IS an attorney if you live in CA you need a CA LLC even if the properties are out of state. He's looked up recent case law regarding this and the fact that you live in CA means that business is being conducted in the state of CA. The fees for not doing so are pretty bad. @Mitch Smith
This video will probably answer a lot of the questions that you have.
Our strategy is to buy properties in our names if the properties are residential (1-4 units) and then put them into the LLC once we have a long-term stable loan on them. Lookup quit claim deed. My partner can legally advise on any of this.
Real Estate Agent · Palm Beach Gardens, FL · Member since 2017 · 199 posts · 124 votes
9y
Hi,
I don't know about CA, but here in Florida it is very easy to go to the State of FL website and set up your own LLC on-line. The first time I needed an LLC I had an attorney do it for me and soon after I learned how easy it is to set it up yourself in Florida. You can be your own Registered Agent as long as you have an address that can receive mail service. (At least that is how it works in FL.)
LLC is primarily physiological insurance. You will get the same financial protection from maintaining adequate insurance including a umbrella policy as you get from a LLC. Additionally you need to keep the equity in your properties at a bare minimum either with or without a LLC.
Down side of a LLC is financing issues and additional business costs. You still also need the same insurance coverage with a LLC so in reality redundant protection.
About 50% of real estate investors have a LLC. IN some states you may be ceasy not to have a LLC, CA may be one of them due to the overly litigious nature of the citizens (not sure).
Rental Property Investor · Costa Mesa, CA · Member since 2015 · 53 posts · 23 votes
9y
@Terry Lao - Lima One Capital offers a 30 year fixed rate loan on rental properties that are non recourse loans lent to the LLC. It is at a higher rate ( around 8%) and based more on the structure of the deal as opposed to personal credit and dti, although they do factor in your credit score for the final rate.