Putting the investment in an LLC

[Lau Cor]

Hi all! New investor here on Bigger Pockets. I just wanted to see if I could be directed as to how I can get an LLC for my first rental. Should I just buy the rental first personally and then transfer it to an LLC later? Or should I create the LLC and purchase the home under that? If so, do I use my personal bank account to apply for a loan or do I need to put money in the business bank account? Is there a video that teaches how to do that somewhere? Thanks everyone.

[Savannah Wallace]

Hi @Lau Cor

For my clients, I recommend that they place the properties in separate LLCs that has been formed in the state where the property is located and have the member of that LLC be a Wyoming LLC. This provides for both anonymity as your name won't be listed on public record in relation to the LLC as well as charging order protection.

It is advisable to work with a local attorney to help determine the best structure for you and to have them draft the paperwork for the LLC. A well-crafted Operating Agreement (OA) is essential as it outlines the ownership structure, management responsibilities, profit and loss allocation, and other key operational aspects of the LLC and can also reinforce the legal separateness of the LLC. While there are inexpensive DIY options out there, I highly recommend working with a local attorney to help you set up your LLC. I've had the opportunity to review a number of templates from companies, like LegalZoom, and have found that they often lack the necessary detail and thoroughness required for effective business management. Important sections are frequently omitted, which can create challenges in day-to-day operations and long-term planning.

This lack of comprehensive documentation becomes especially problematic if you ever consider bringing in partners or expanding your team. In my experience, the materials provided by these companies rarely offer sufficient guidance or clarity to support such transitions smoothly.

Good luck with your property! 

Note: This information is for educational and informational purposes only and does not constitute legal, tax, or financial advice. No attorney-client, fiduciary, or professional relationship is established through this communication.