Location of LLC for turnkey rental properties

5 Replies

Hello BP Community,

I'm preparing to purchase an out of state turnkey rental property. I realize the merits of this strategy has potential to spark a lively debate on this forum but that is not the focus of this post. I intend to purchase this property under an LLC. My question is, should the LLC be established in my state of residence or in the state of the property itself? Will the location in which the LLC is established have tax implications for the rental income?

Timothy Smith, Real Estate Agent in CO (#FA.100070910)
(719) 301-5777

Are you getting US conventional bank financing or are you just paying all cash? I doubt you will get a bank to do a conventional loan to an LLC.

Good luck

Curt Davis, Real Estate Agent in TN (#00321765)
605-310-7929

Correct! I've already run in to roadblocks with conventional loans for an LLC. This will be a cash purchase.

Timothy Smith, Real Estate Agent in CO (#FA.100070910)
(719) 301-5777

@Timothy Smith

Many may argue the merits of using a Delaware, Nevada, etc, LLC for the sake of anonymity. However, you still need to register the LLC in the state you are holding the property to benefit from the laws of that state, so it likely makes more sense to just do that, and cut down on administer fees such as multiple state registration filings, accounting costs, etc.

I wouldn't set up the LLC unless you work with an entity specialist who can advise on your questions, as well as your accountant. No offense to anyone trying to help on the forums, but this isn't an area you want to budge from just talking to the professionals.

This doesn't answer your questions but it's an article related to LLCs on rental properties. Check out the comments...there are a ton and all helpful. Might find some indirect answers there...

http://www.biggerpockets.com/renewsblog/2013/08/17/rental-properties-llc/

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