We are 3 friends who have created an LLC in the state of Florida to invest in residential real estate and mostly turnkey. Next step is to create an operating agreement and we are looking for an attorney with real estate expertise to help us put it together. We have two questions:-
1- Should we look for an attorney in our home state or in Florida?
2 - What is the ballpark cost we should be expecting?
Below are some specifics that we want to include in the operating agreement if that helps.
- 3 members (2 in New York City and 1 in Boston, MA)
- LLC will only be used to invest in one property
- Member will put equal initial capital contributions with cash
- Provisions for additional capital contributions
- Provisions for LLC to borrow money from existing members or other persons/entities
- Provisions on bringing on other types of investors (non-controlling)
- Net profit and loss distributed as per capital contribution (pro-rata)
- provisions for situations if any member wants to leave or dissolution
- provisions for legal or tax issues
- Provisions for disagreements.
- What happens if a member or two want to sell the property?
- Provisions for repairs.
Thanks so much.
You need to hire an attorney to get answers and advice. You have principles in more than one state, so securities laws in both states may have to be dealth with. MA and FL aren't exactly known for being strong asset-protection LLC jurisdictions like TX, DE, or NV. If you're going to use an LLC that is already out-of-state as compared to the RE parcel, you may want to discuss with an attorney about a TX, DE, or NV LLC that then registers in the state where the RE parcel is located.
Costs should be somewhere in the $1,000 to $3,000 range if it's just you three. If you start bringing in outside arm's length investors, the securities regulation compliance can increase legal and expenses another $5,000 to $50,000+ depending on scope of the capital raise.
You should also NOT form the LLC first and then go to a lawyer. Make sure to talk to a lawyer before doing anything on the LLC.