My wife, Kristin, and I are looking to setup an LLC so that we can begin buying rental properties in the St. Louis area. Friends have suggested that we meet with a real estate attorney in order to ensure that we have everything lined up legally prior to beginning the endeavor.
Our real estate agent gave us the name of a seasoned real estate attorney in South County and we are meeting with him next week. We are planning to have him look at an operating agreement that we drafted with the guidance from a template we found online. We'd also like to ask him some questions about multiple LLCs and structuring etc.
Aside from these, would you all have any suggested questions to ask while we have time with an attorney? We know that he has been focused on real estate for a long time and we currently don't have cases to ask about. However, are there questions that you wish you knew to ask an attorney prior to acting?
Thank you all!
Kristin and Brandon Edwards
That is a pretty open ended question and depends a lot on your goals. Are you planning on using this attorney in the future or just to make sure you set up your entity correctly? Did you set up you LLC for asset protection for yourself? Otherwise why did you make a LLC in the first place? If you are using him in the future make sure you understand his rates, if he will charge you for a simple emailed question, how phone calls work. Will he be drafting documents for you? How much will they be to create, amend, and review each year? Will he be your office for closing deals? If so what are those fees involved? Ask him what the yearly requirements are you need to follow so you do not pierce the corporate veil in MO. How much does it cost for him to set up a LLC for you? You may want to ask him about series LLCs in your state. Honestly there is a lot. And the more answers you get will only cause you to have more questions so just be prepared for that.
If you used a template for your operating agreement from LegalZoom or some other such site, be prepared to have him rip it to shreds because it is probably pretty crap. But the only time it would matter is if you get divorced or sued so it probably doesn't matter all that much. If you are just doing residential property rentals you really don't need more than a decent insurance policy. As you get more sophisticated you can set up proper LLCs and other entities with the help of a lawyer. I thought I could set up a cheap LLC and it wouldnt be a problem but I ended up hiring a lawyer to do it for me and man-o-man, I think of myself as a pretty smart guy but there was no way I could have put together everything the way a lawyer does. You just don't know what you don't know. But it is all part of the learning process so good job for going this far. Good luck.
Thank you very much, Peter! This is great advice. We were initially going to speak to him for guidance in setting up the operating agreement and LLC. If we like him and feel that it is a good fit, we were planning to ask him about his fees and if he ever acts as the registered agent for LLCs.
We hadn't considered asking about the yearly requirements piece for legally sustaining the corporate veil... We knew that you had to ensure separate financial records, bank accounts and shouldn't purchase items for the rental properties from our personal accounts.
It is perfectly fine if he either shreds or totally dismisses our agreement draft - that's what we are hoping for by speaking with him. Our main goal of setting up the LLC is for asset protection. By speaking with him upfront regarding these issues, we're hoping to start off on the right foot with guidance and information.
Thank you very much for the insight and suggestions!
Brandon & Kristin
My CPA opened one for me when I was buying a commercial property in IL. He is STL based. Should not cost you more than 500 $ i guess.
Nexus CPA. 201 Clarkson Executive Park, Ellisville, MO 63011. You can google him or PM me for his cell.
My wife and I had our appointment with the suggested real estate attorney last week. Due to several factors, we chose to not have him setup our LLC. Some of his comments did leave us with questions that conflicted our research:
He said that the operating agreement didn't' matter since it was going to be just my wife and I in the LLC and that we could use any ole "boiler plate" operating agreement template we found on the internet. That only banks really cared about operational agreements and we could tear up and submit other versions later.
Our inclination was that the operating agreement was a pivotal piece in setting up an LLC, not so much for us regarding divorce but more if we were sued.
He also suggested that we be our own registered agent vs him or someone else. We thought we read where being your own registered agent could lead to not only missing delivery of important items, being potentially embarrassed by being served items at work but could also cause you to fall out of good standing with the state.
Does anyone have any thoughts on this? Being our own registered agent...
We are continuing to look for a knowledgeable attorney to help answer questions as well as guide us through setting up our LLC. This gentleman appeared irritated that we had researched and come with questions/potential templates and was more pushing for us to have him set it up 'correctly' - We questioned that a little when he made the previous comments about operating agreement and registered agent.
Thanks for the help,
Brandon & Kristin
Thank you very much for the CPA suggestion in Ellisville, MO - We were able to find his website and contact information there - we will definitely keep him in mind. We are looking to have a formal conversation with an acting real estate attorney so that we can ask our list of questions and gain some of their knowledge base. Kristin and I are confident we would be able to submit forms and setup the entity online ourselves, but want to suppress fears some with this conversation.
Thanks for the tip,
Brandon & Kristin
I am an actual real estate attorney and would be happy to talk with you and your wife. I am just down the road in Clayton. If you would like to set up a time to talk, please let me know. I can provide references with other real estate clients I have worked with. Good luck! Tom Durphy
Hi Charles, did you ever end up finding an attorney that answered your questions? we are in a similar situation right now, getting ready to invest in hopefully single or multi family homes and also have many questions regarding setting up LLCs for asset protection and are at the point where we also want to meet with an attorney....what did you end up doing if you dont mind sharing?