What state do you recommend for LLC?

Question

I am new to real estate investing and looking to set up an LLC. I live in New York but plan to invest outside of NY. I have read conflicting articles on the topic. Thank you!

Bill P. · Answer

@Kathy Shaps I always form the llc where the property is located.  Been doing that way for 20 years.

Kathy Shaps · Answer

@Kathy Henley- I have read some good articles on St. Louis recently and will add to my list 😄

Kathy Shaps · Answer

@David M. Thank you! Makes sense not to mix the 2. Thank you for all the links as well!!

David M. · Answer

@Kathy Shaps

If you are going to go the route of a LLC, the entity needs to be registered/formed in the same State as where the property resides.  Otherwise, the entity will have no legal standing in that States.

Here some prior discussion threads on LLC's.  You

https://www.biggerpockets.com/...

https://www.biggerpockets.com/...Generally, mixing personal and business assets is "bad."  So, taking Title in your name and giving the mortgage on purchase then just transferring Title is not such a good idea in my layman's opinion.  Lots of people/investors do this, but we never have a story where somebody was sued and it stood up in court.

If you just purchase personally, you would landlord insurance and an umbrella policy (see below discussion thread), which you would use anyway with a property that you held Title with a LLC.

https://www.biggerpockets.com/...

Hope this helps.  Good luck.

Kathy Henley · Answer

@Kathy Shaps I have family in the area. My attendance at family functions improved when I lived on the west coast and searched for investment properties. My focus was on college towns and this town has it, plus big science and sports teams. All good for a pool of working tenants.

Kathy Shaps · Answer

@Kathy Henley Thank you! Good tip- do my first one under my own name and can transfer to LLC- makes sense and it helps me as I am going off on tangents right now. How did you decide on St Louis? I have been researching Texas, Florida and North Carolina. I have heard St. Louis has good deals.

Kathy Henley · Answer

@Kathy Shaps In the state where you buy investment properties. If you first few loans will be in your personal name, no need to rush the LLC (unless you are forming a company with partner/partners).  A separate bank account for real estate activities is nice, but not required. Start keeping track now since traveling to find the right out of state location, with the intention to invest, is a business expense.