Establishing an LLC without tenants

St. Petersburg, Florida
Tax, SDIRAs & Cost Segregation
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Establishing an LLC without tenants

Mallory Woltering
Member since 2019 · 1 post · 0 votes

Hello all - I just bought my first duplex in FL. We are in the process of evicting the current tenants. I have established an LLC for the property via legal zoom…so by the time we renovate and get new tenants in there - everything will be under the LLC instead of my personal name. However, when i went to open a business checking account today for the LLC - I was told by the manager that I will have to provide my tenants information to open the business/checking account. Is this correct? If so - how does this work for short term rentals such as Airbnb? What if I was just renovating the property and wanted to have it under an LLC? I would like to have everything regarding the property under the LLC before getting new tenants. I am also open to any suggestions that anybody may have regarding this topic, this is my first time. Thanks in advance.

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  • Charles Carillo
    Rental Property Investor · North Palm Beach, FL · Member since 2018 · 2k+ posts · 1k+ votes
    4y

    @Mallory Woltering

    I have never heard of this. I would go to a different bank.

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  • Sergey A. Petrov
    Real Estate Consultant · Seattle, WA · Member since 2022 · 1k+ posts · 784 votes
    4y

    Your bank doesn’t care about your tenants. Someone is very very confused somewhere 

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  • Greg O'BrienBusiness Member
    Accountant · Boston, MA · Member since 2019 · 386 posts · 336 votes
    4y

    @Mallory Woltering the bank is incorrect or has bizarre rules. Id find a new bank that works with investors

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  • David M.
    Morris County, NJ · Member since 2020 · 5k+ posts · 2k+ votes
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    @Mallory Woltering

    Something is wrong.  So, if I was opening a "pizza shop" I would need to give the bank the list of all my customers first before opening an account?  If you really like that bank, try going to a different branch.  Trust me, I've had that problem --- some people are just horrible at their jobs.

    Since you asked ofr advice, how did you get on this LLC idea? Have you read this: https://www.biggerpockets.com/...

    While I understand the limited liability aspect is appealing, its not always necessary. Also, realize that its more costly. Done correctly you will be using commercial loans since legal entities are not eligble for conforming residential loans. Looks like you already closed. If you used financing, you should really refi during/after you transfer the Title to the LLC. You need to protect the LLC's corporate veil (which is a legal issue, not an accounting or lending issue so those professions don't primarily care about it): https://www.biggerpockets.com/...

    There are many things you can do "accounting-wise" that are "fine," but don't help your corporate veil.

    Not sure about your question renovating the property and LLC... You need to operate the LLC as a separate entity from yourself. no co-mingling or using it as your alter-ego. Unless you are setting up extra contracts between yourself and your LLC, the LLC will need to have its own AirBNB account as well. Also, you might want to consult with a qualified professional about your LLC setup instead of just legalzoom...

    Lots going on here it seems.  Good luck.

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  • Simon W.Business Member
    Real Estate Consultant · Lehigh Valley PA & New York City · Member since 2013 · 1k+ posts · 681 votes
    4y
    Quote from @Mallory Woltering:

    Hello all - I just bought my first duplex in FL. We are in the process of evicting the current tenants. I have established an LLC for the property via legal zoom…so by the time we renovate and get new tenants in there - everything will be under the LLC instead of my personal name. However, when i went to open a business checking account today for the LLC - I was told by the manager that I will have to provide my tenants information to open the business/checking account. Is this correct? If so - how does this work for short term rentals such as Airbnb? What if I was just renovating the property and wanted to have it under an LLC? I would like to have everything regarding the property under the LLC before getting new tenants. I am also open to any suggestions that anybody may have regarding this topic, this is my first time. Thanks in advance.

     Hi @Mallory Woltering  the person you spoke to is probably trying to have you open an escrow account.

    It isn't required for opening a business checking account.

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