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Out of state LLC rental
I am about to buy a property (or 2) in PA for rental purposes. I have a NY LLC which I created for a NY deal that didn't happen. Is there any reason I should or should not use this current NY LLC for purchasing my PA deals? The forums are chock full of info on creating LLC's, but this one already exists and owns nothing.
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Hey Matthew,
The main reason you wouldn't want to go with this plan is as Mark mentioned - you would end up paying additional foreign filing fees to use the old LLC. You can work around this through placing the property into a land trust, as it would technically be the land trust conducting business in the other state and not the LLC - it would just be the beneficiary. But at this point you are making things more complicated, so it might not be worth that much effort. There is some benefit to adding a land trust, though, as you can introduce some anonymity through the use of the land trust. Investors who own more than one property and span multiple states will often implement this strategy in conjunction with a Series LLC formed in a favorable state - an added benefit is that everything can be (if you choose) housed under a single EIN making tax time a bit more streamlined.
If you plan on doing it yourself, the general rule of thumb is create the LLC in the state of the property. It is highly recommended to have an experienced attorney look it over, as this is how you learn about specific strategies that can save you hassle/money in the future and avoid possible obstacles.
This isn't legal advice, just my opinion as a real estate investor. Feel free to reach out if you have more questions.