Hello, Question on LLCs. I'm in contract to close on my 3rd long term rental on April 18th. My other two are under LLCs then we have a holding company on top of that. Talking to the law firm that set these up they are saying to purchase the property under my name then switch to an LLC after we close. Cost to have them do this $500. There is also a $155 filing fee payable to the Secretary of State for each LLC. Does this process seem normal and is this something I can do to save the $500 or their a-lot to it and I'm better off paying the $500.00. Plan to buy several more so just trying to get a process in place. Thanks BP
If they are SMLLC's you can set them up yourself. Multi-member I would always go to the attorney and have an operating agreement drafted. Just make sure you register for the required state filings. As a CPA when people set up LLC's themselves I spend 1/2 the time registering for things they need. The good news if you go to the attorney is typically things are done right the first time.
Investor · Northfield, NJ · Member since 2017 · 43 posts · 3 votes
4y
I created an LLC when we purchased our first rental a few years back. Im in the state of NJ and did not use a lawyer to create the LLC. I was able to do the process on my own. Im not an attorney so this is not legal advice, simply telling you that I started and maintain an LLC and did not consult a lawyer to create. One thing I learned, however, was when I purchased a property and took title in my LLC while using seller financing, it became difficult to find a mortgage company who would refinance the loan into conventional loan in the LLC. I had to transfer title to my personal name using a lawyer, refinance, then transfer title back to the LLC. Just something to think about ... best of luck!
Waltham, MA · Member since 2021 · 38 posts · 26 votes
4y
Just my 2 cents, but always use a lawyer. Too many people have been burned not filling out forms exactly as necessary, or using those online legal services. A good lawyer will ensure you're actually getting what you need because his or her name and license are on the line, and then ensure you actually know how to take advantage of that LLC without losing the protections it provides.
If they are SMLLC's you can set them up yourself. Multi-member I would always go to the attorney and have an operating agreement drafted. Just make sure you register for the required state filings. As a CPA when people set up LLC's themselves I spend 1/2 the time registering for things they need. The good news if you go to the attorney is typically things are done right the first time.
Hello, Question on LLCs. I'm in contract to close on my 3rd long term rental on April 18th. My other two are under LLCs then we have a holding company on top of that. Talking to the law firm that set these up they are saying to purchase the property under my name then switch to an LLC after we close. Cost to have them do this $500. There is also a $155 filing fee payable to the Secretary of State for each LLC. Does this process seem normal and is this something I can do to save the $500 or their a-lot to it and I'm better off paying the $500.00. Plan to buy several more so just trying to get a process in place. Thanks BP
Pay the attorney fees. It's a cost of doing business plus a form of insurance.
If they are SMLLC's you can set them up yourself. Multi-member I would always go to the attorney and have an operating agreement drafted. Just make sure you register for the required state filings. As a CPA when people set up LLC's themselves I spend 1/2 the time registering for things they need. The good news if you go to the attorney is typically things are done right the first time.
And for reference for Frankie, how much do you charge, on average, to correct things for those who self filed? Not asking for actual numbers - just giving him another frame of reference. As Bruce said, it’s just a cost of doing business.
Investor · Topeka, KS · Member since 2020 · 669 posts · 488 votes
4y
@Frankie Cullinan for our first LLC we paid the money to have our real estate attorney set it up. We sat down and literally watched him go through the process on the state website. However, he also explained what everything was, how the taxes would work depending on what option we chose, etc. So we paid to learn how to do it. I would feel totally comfortable doing it myself now, but only because I had someone who knew what they were doing.
If they are SMLLC's you can set them up yourself. Multi-member I would always go to the attorney and have an operating agreement drafted. Just make sure you register for the required state filings. As a CPA when people set up LLC's themselves I spend 1/2 the time registering for things they need. The good news if you go to the attorney is typically things are done right the first time.
And for reference for Frankie, how much do you charge, on average, to correct things for those who self filed? Not asking for actual numbers - just giving him another frame of reference. As Bruce said, it’s just a cost of doing business.
Most of the time I turn the work down or quote it high enough they look elsewhere. I generally expect people who invest in real estate and claim they are treating it as a trade or business to run it as such. I am a very firm believer in "do the things you are good at and pay people for things you are not"
Lender · Member since 2022 · 441 posts · 134 votes
4y
Would recommend using a lawyer but I do not agree with the buying in your name and then into the LLC. Why not just buy it in the LLC, less transferring, paper work and fee's
Real Estate Investor · Saint Paul, MN · Member since 2017 · 543 posts · 474 votes
4y
@Alex Hunt Financing - does the LLC have the income necessary to get the loan? Unless you are getting a DSCR loan, that may be different. And commercial loans are generally a little more expensive that personal loans and usually have an interest rate reset every five years
Rental Property Investor · Portland, OR · Member since 2020 · 26 posts · 23 votes
4y
@Frankie Cullinan
My first rental, I used an attorney. They shared with me how to do it and what elections to make. Going forward, I’ve just replicated that exact same set up when registering/setting it up with the Secretary of State’s office for additional properties. Same thing with the Operating Agreement.