So, I've read that if you are in California and own real estate in another state, you must register the LLC in California still ($800/year). I want to buy in Florida. Would that mean I'd have to pay LLC fees/register in Florida ($125/year) as well as registering the LLC in California?
Also I plan on owning this property 50-50 with a trust-worthy family member and partner. Would the "Operating Agreement" be really necessary or could I just fill out the paperwork? I've heard differing opinions on this.
We plan on paying all cash for the property so we need the liability covered. I've also heard from people that it's better to invest the money you would in an LLC (which is $800+ per year in California) into some good Umbrella Liability Insurance to cover our other assets as well as the property itself.
Any other suggestions are welcome!
@Will F. I don't know about CA specifics. But the operating agreement is part of having a legally established LLC. It can be simple, but you need one. The other consideration is that a well thought out and discussed agreement could save a relationship that might be damaged by a misunderstanding. Not having it in writing means you might each be making different assumptions. It is not so much the legal requirements as the understanding of the who, what, where and how of it as things progress. Especially if something goes wrong.
There are those who say you don't need an LLC. And you don't. But insurance alone is not as good of a protection as a well thought out and implemented asset protection plan. Having an LLC, insurance, and risk reduction plan all help. Treat your tenants right, reduce hazards, check your contractors for proper licenses and insurance, get permits, etc. The little things that you hear people say don't matter, matter. Being able to show that you took steps to reduce and eliminate risks will help in the long run.
Thanks for the info.
Do you know, or anyone who resides in California but owns out of state, if we have to pay the $800 fee/tax to California for an out of state LLC and out of state ownership (florida real estate)
Just FYI for anyone. Yes if you buy out of state and put a property in an LLC you indeed DO have to pay the $800 per year LLC tax... so annoying, I guess I'll be getting heavy liability insurance
Also, as an fyi, if you ever needed to turn on the utilities in your LLC name for your rental, the utility company will verify online on sunbiz.org that the LLC is registered in FL.
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