Looking for advice / general guidance

[Marcus Perez]

Hi BP!

I'm a relatively new real estate investor, I live in NJ, but currently investing in Orlando FL, started last year with 3 properties. I'm looking for advice on how to setup the company structure, right now I have multiple LLCs, but I'm seen ppl also setup a holding company for additional protection and usually setup the LLCs where the properties are located, I have mine setup in the state where I live (NJ), I have many questions about what is the recommended approach.

- Should setup a holding company this early, or does it make sense after certain number of properties?

- Should I move the LLCs to FL, or is registering as a foreign company the same long term?

Looking forward to great advice from the community!

[V.G Jason]

Quote from @Stephen Sherbin II:

Quote from @Marcus Perez:

Hi BP!

I'm a relatively new real estate investor, I live in NJ, but currently investing in Orlando FL, started last year with 3 properties. I'm looking for advice on how to setup the company structure, right now I have multiple LLCs, but I'm seen ppl also setup a holding company for additional protection and usually setup the LLCs where the properties are located, I have mine setup in the state where I live (NJ), I have many questions about what is the recommended approach.

- Should setup a holding company this early, or does it make sense after certain number of properties?

- Should I move the LLCs to FL, or is registering as a foreign company the same long term?

Looking forward to great advice from the community!

Hi Marcus, my viewpoint is always set yourself up for success in advance. The strategy that I heard from a wealth management group that had a lawyer as one of the two heads of the company was to have one entity set up in I think it was Wisconsin or Minneapolis or one of the states in the Midwest, I forget which one it was exactly but in that state the laws favor the individual with the entity, and they refuse to give identifying information to anyone. They said it was almost impossible for someone to figure out who the owner of the company was thanks to having that level of protection, and then they would put each LLC into that parent company, and that company didn't have to state what other entities it held. I may not be explaining it very well, but I've still got the contact info for that wealth management group. Send me a message if you'd like me to send it to you.

It's Wyoming.

You have a Wyoming holding LLC(call it MPerez LLC). Then you create two child LLCs underneath it per state you operate in. One as a title holding LLC(call it FL Title LLC), the other as a property managing LLC(call it FL PM LLC).

When you buy a few houses in Orlando, you transfer or close the title in FL Title LLC. And there's an operating agreement between FL Title LLC and FL PM LLC. The agreement is PM LLC handles all business for the properties under FL Title LLC. So your property manager, your contractor, etc., all do business with FL PM LLC. 

MPerez LLC(WY Holding) is the member of the FL Title LLC and FL PM LLC. This does not defeat lawsuits, does not achieve full anonymity, etc. It just gives you a level of anonymity, full liability(if you manage your bank account correctly) coverage that is enough to deter frivolous nonsense from really anybody or anything as you manage and scale.

I'd say the LLC set up is good if you have 1 or multiple. If it's your only investment, I would protect it like none other. You don't need a minimum asset count or net worth for it's benefit. If you're a mom  & pop, and have 2 investments in Greenville, South Carolina. And these two are cash flow/equity plays for 20 years from now in retirement-- absolutely protect it. Real estate investors whether you are small or big will always be a target, and more so in the future as home ownership struggles.  Don't sit here and get cute. You put lots of capital to get the houses going but a proper LLC set up(under $2,000) is the cut off?

That's just missing the forest for the trees.