Our offer was just accepted for a condo on the beach in Miramar Beach, FL! This is our first foray into REI aside from our primary home (which while it technically is, I guess, I don't really consider REI). My understanding is that I will want to set up a Florida LLC to hold this property. Then, possibly set up another LLC (in another state) to hold the FL LLC. Is that needed and/or useful? I'm taking out a personal mortgage for the property. Should the property go into my name at closing, then later transfer into the LLC? Or should I have the LLC set up and title directly into the LLC at closing? Does it matter? Since I'm just getting started in this realm, I'm also needing to "build my team", so if you have recommendations, please send them my way. I'm not sure what other information is needed or helpful for you to provide guidance and recommendations, so just let me know if you need more info to provide useful responses.
Developer · St. Augustine, FL · Member since 2018 · 311 posts · 384 votes
3y
Like others said, the best person to answer these questions is an attorney who specialized in this.
We have our company restructured last year so I can provide some insights, I'm in Florida as well.
There is an expense associated with setting up an LLC, you are looking at about a few hundred dollars to setup the first time and a little over one hundred dollar to file each year (Note, this is just the cost to setup a LLC, if you are asking an attorney to structure your company, it's a lot more (a couple of thousands in my case) depend on how much you have and how much time the attorney has to spend on your case). At the minimum, you need to have an annual meeting and submit your minutes (so whatever cost you can assign to that). If you just want to retire off a few real estate properties, you don't need a LLC. The cost doesn't justify the benefit.
If your goal is to grow a real estate empire, then you will need a sophisticated setup and an asset protection real estate attorney is the best person to help you.
If that's the end goal, you don't want to close the property in your personal name and then transfer to the LLC because for one, the bank may not like it (they may or may not complain depend on which bank you use, but in the end, they will guide you through the process to get it done, not a big deal).
The second is the more important one to you, you may have to pay double doc stamp fee and/or closing cost to get it done and this is not an insignificant cost. Ask your title company and they should have the answer to you.
In summary, if you plan on setup a LLC for your business structure, speak to an attorney and set it up as early as you can. There is no benefit of delaying it unless you are just on the fence between "should I just do a couple properties and retire" and "I'm gonna be a real estate tycoon".