To LLC or Not to LLC

[Chris Papa]

Hi guys - im based in the SF Bay Area and looking to invest in some SFR's in Dallas with a partner. Would you recommend that I reach out to a TX based attorney to form an LLC or should i just go through the Legal Zoom route? Do you think i even need an LLC? Any help is appreciated!!

[Logan Allec]

@Chris Papa, if you're going to be investing with a partner, it's definitely money well spent to hire a good attorney to form your entity and draft your operating agreement or otherwise memorialize the economic arrangement between you and your partner.  Remember, a good agreement makes a good deal better, but a bad agreement makes a good deal bad.

Also, as @Dan H. alluded to, if either of you performs any activities whatsoever while residents of California, the state of California's position is that you will have to register your LLC with the California Secretary of State (even if formed in Texas or some other jurisdiction), file the annual Form 568, and pay the annual $800 tax.

Also, by forming an LLC in Texas, you may be subject to the Texas Franchise Tax.

So really the only person who can answer the question of whether you need an LLC or some other entity/arrangement is a qualified attorney who thoroughly understands each partner's situation with respect to themselves and each other.

If you need a reference to a good one, I have one.  Like I do for my practice, she works with clients remotely, so distance is not an issue.