HOW TO SET UP AN LLC TO LEASE A HOUSE

3 Replies

Hi Liz!

- You'll need to register with your state's Secretary of State department. Here is the form for Texas, https://www.sos.state.tx.us/corp/forms/201_boc.pdf

- apply for an Employer Identification Number with the IRS

- create an Operating Agreement. This is extremely important if you're partnering up with another person for the deal. You can take a look at my response in the below forum for an example operating agreement

https://www.biggerpockets.com/forums/32/topics/568...

- make sure to open a business checking account and a business credit account (if you plan to use a credit card for expenses). Make sure that ALL expenses and payments for the investment property LLC are paid using your business account. AND don't pay personal bills using these accounts. Not only does this make things easier for bookkeeping, it helps to keep you under the protection of the corporate veil... you don't want a potential lawsuit regarding the property to be able to "pierce the corporate veil" by finding you used your personal credit card to pay for an expense related to the LLC.

- most lenders will not lend to an LLC, so if you plan to finance the property you'll need to get the title in your name and then deed the property to the LLC. I recommend you get a real estate attorney to handle this/ give you more insight as it can be a complicated legal matter

I think that's a pretty good start. Hope it helps!

Thanks,

Nick

Originally posted by @Nick G. :

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- most lenders will not lend to an LLC, so if you plan to finance the property you'll need to get the title in your name and then deed the property to the LLC. I recommend you get a real estate attorney to handle this/ give you more insight as it can be a complicated legal matter

What is the basis for this comment? All HML, credit unions, banks or private equity funds will lend to an LLC. I think that covers 99% of lenders out there. Who does not loan to an LLC?