Should I get a virtual mailbox for my non-LLC rentals?

Question

Hi, since I live in California, an LLC is not a viable option for me for my out of state rentals (9 of them, mostly B/C). They are all managed by a property manager. It bothers me however that for my tenants it is so easy to find out who I am and where I live with one simple click on a real estate listing to get the property tax records. I was considering setting up a virtual mailbox (travelingmailbox.com maybe) to at least hide where I live, even though my name would be there. I realize that it would be far from bulletproof, but is it worth $15 a month just to make it a little more difficult to find out who I am (how much my own home is worth, etc.) and dissuade frivolous lawsuits (or creepy tenants).

Thanks!

Matt Horwitz · Answer

@Ian S., you are correct re: franchise tax. I recommend the mailbox setup for privacy. I've worked with a handful of companies over the year and the biggest thing to be aware of (in re: the franchises) is each is owned and managed differently... and having a great company vs. a crappy one can make all the difference.

Here is my SOP (standard operating procedure):

1. Google search "the ups store {your city and state}" or "mailbox rental {your city and state}

2. Print off a few of these questionnaire documents

3. Call each location and run through the questions below

4. Choose the business you trust and feel most comfortable with

[=================================]

Price for Business Box:-What is the monthly price of a small business mailbox?

Address Formatting:- What is the address format of this location?- Can I use Apt., Suite, #, Unit, etc? Are there any restrictions to what I can use? What are my options?

Personal Use? Multiple Businesses/LLCs?- I will register the box in my business/LLC name, but can I also get mail sent to my personal name as well? What about if I have multiple LLCs?

Mail Forwarding:- Do you offer mail forwarding? What is the charge for mail forwarding?

Packages:- Can I also receive packages? If so, can you forward them (re-ship) or do I need to pick up?

Ownership & Longevity:- How long have you been at this location?- I'm looking for a long-term solution for my mail... just curious, how long is your lease until? Do you plan on moving in the next 3 years?

Hours:- What are you hours? If I pick mail up, can I only retrieve it during normal business hours, or do I also get a key for after hours access?

What's Needed to Open Box:-What do I need to open the mailbox? 2 forms of ID? Anything else?

Ian S. · Answer

Thanks for the comment!   As soon as we form an LLC (whether it be in state or out of state) it triggers the California LLC Franchise tax of $800 a year.  There are many threads on biggerpockets about it.  The state has beautiful weather but it's not the most friendly climate for real estate investment!!  From another thread:

Maheen Akhter · Answer

Curious, but why do you feel like an LLC is not a viable option? Do you feel awkward disclosing your address through the Secretary of State's website?  If you're looking for a registered agent this might be useful tool: https://www.cscglobal.com/cscglobal/home/. In many states you can own property under an LLC in one state and is not registered as a foreign LLC in state where you own property. An example of what this might look like is O.C.G.A. § 14-11-702, which reads as follws:

(b) Without excluding other activities which may not constitute transacting business in this state, a foreign limited liability company shall not be considered to be transacting business in this state, for the purpose of qualification under this chapter, solely by reason of carrying on in this state any one or more of the following activities: (1) Maintaining or defending any action or administrative or arbitration proceeding or effecting the settlement thereof or the settlement of claims or disputes; (2) Holding meetings of its managers, members, or other owners or carrying on other activities concerning its internal affairs; (3) Maintaining bank accounts, share accounts in savings and loan associations, custodial or agency arrangements with a bank or trust company, or stock or bond brokerage accounts; (4) Maintaining offices or agencies for the transfer, exchange, and registration of membership or other ownership interests in it or appointing and maintaining trustees or depositaries with relation to such interests; (5) Effecting sales through independent contractors; (6) Soliciting or procuring orders, whether by mail or through employees or agents or otherwise, where such orders require acceptance outside this state before becoming binding contracts and where such contracts do not involve any local performance other than delivery and installation; (7) Making loans or creating or acquiring evidences of debt, mortgages, or liens on real or personal property or recording the same; (8) Securing or collecting debts or enforcing any rights in property securing the same; (9) Owning, without more, real or personal property; (10) Conducting an isolated transaction not in the course of a number of repeated transactions of a like nature; (11) Effecting transactions in interstate or foreign commerce; (12) Serving as trustee, executor, administrator, or guardian, or in like fiduciary capacity, where permitted so to serve by the laws of this state; or (13) Owning directly or indirectly an interest in or controlling directly or indirectly another person organized under the laws of or transacting business within this state.Good luck!

Ian S. · Answer

Any comments? Thanks!