Hey all, living in California and buying in another state.
What safe guards do I need to put in place for buying outside California. I'm buying with my sister-in-law and need to think of ways to protect ourselves or myself. I don't want to have a problem with one of my properties and then losing everything I own. I thought about LLC or corporation but see from other blogs that its a cost I don't need to endure.
@Craig Sweeney That's a very open-ended question depending on your circumstances, other assets, relationship with your sister-in-law, budget, type of property, type of tenants, risk tolerance, etc. An LLC or a corporation can be an expensive endeavor that may not be necessary and you may be able to use a good umbrella insurance policy. At some point though, having good protection may be a cost and hassle worth paying for, even if just for peace of mind. A C-corp traditionally has been a poor vehicle for rental real estate but now with a lower 21% tax rate, is becoming a better alternative, especially compared to an LLC which can be taxed as high as a 37% individual rate since LLCs are pass-through entities. I'm working with clients in San Diego right now that are going through that analysis at the moment, especially with the newest 199A 20% deduction/rate just enacted with the newest laws too. Lots to consider. If you're in CA I'm sure you've heard about the $800 minimum tax an LLC would cost you, but for some people that is absolutely worth it. Let me know if you need referrals for CPAs or attorneys in San Diego or Southern California. Can't say I know too many people in Nor Cal to send you to. Good luck!
*None of this post is intended to be legal or professional advice. It does not create an attorney-client or CPA-client relationship. Readers are advised to seek professional advice.
More than anything else, buy from someone you know and trust. Go out and interview property managers, real estate agents, attorneys, CPAs, etc. It's really easy for someone to take advantage of someone who they've never met, or at the very least, give them less than stellar service.
Come out to Idaho- the market here is great, I'll introduce you to everyone you need to know!
Best of luck-
Thank you both.
I do trust my agent just want to be sure and sound advice from you both.
Katie, I hope to retire in San Diego in a few years. Love San Diego and my brother lives there.
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