We've had a purchase offer accepted for a 1BR condo in NW Phoenix. It's been a successful AirBnB/VRBO property til now. Looking for advice for a newbie setting up a short-term rental property.
Should I set up the LLC in Phoenix, the property location, or in NC, our residency state?
Recommendations for property management companies in the Phoenix area - or suggestions on self management - we have family that are willing/interested in doing the hands-on cleaning and maintenance side, but need advice on the rental /financial management part.
@Bill Saunders the LLCs are set up by state, not city, so you would create an Arizona LLC. I'm not qualified to comment on the tax implications of an AZ vs NC LLC, but I can say that AZ LLCs are super easy to set up and only require a one time creation fee (no annual fees like some other states impose). If you are out of state owners, then you are supposed to designate a local statutory agent to receive any official notices. This could be a family member, an attorney's office, or other 3rd parties offer this service.
It sounds like you have a good arrangement to do self management. You would manage the AirBnb listing and be traveler focused, while family members handle on site cleaning and maintenance as needed. You can set up a shared Google Calendar so the family members can see the check in/out times and coordinate the turnovers accordingly.
Thank you Ryan,
That's what I was thinking, but I was reading some (slightly confusing) info about Foreign vs Local LLC, and its unclear whether I would have to set up a second one in the resident state (NC) and link the AZ one to it, which might be a double tax situation...
How much$$ ??
@Bill Saunders The advice I have received in the past is to create an LLC in your local state as you are likely more familiar with the laws there, and you don't have any extra steps (and extra fees) with setting up a foreign LLC (where the property is located). I guess that all depends on the company, specific situation, tax advantages of each state, etc... Also, I have setup my LLCs with an S-corp election so that you have some relief on self-employment tax. Maybe something to look into if you haven't already. Best of luck on your new investment!
Just want to chime in with another option, no LLC at all?
Also, I self manage an AirBNB in Phx out of state and it's going well (over just 2 months so far so ask me again in a year).
Also - long time lurker, first time poster - happy to answer any questions though!
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