I have two active rental properties in my area, both are in my own name. Rehab starts on #3 this coming week. I recently formed a "Series LLC".
1) What is the process for transferring my properties to the LLC, Quit Claim Deed?
2) Is anyone familiar with the Series LLC and how does that affect 1)?
3) Do I need an EIN? Research on irs.gov so far does not make it clear.
4) Do I just go to the bank and tell them I want to create an account for the LLC? Referring to 3), do I need the EIN to open the bank account?
Sorry for such newbie questions, I have just done my flips and these couple of rentals under my name so far and need to make the transition.
1) Don't use a quit claim. Use a general warranty if paid off, special warranty if financed. Quit claims are the worst type of deed. Even a deed without warranties is better but since you own the LLC use special or general.
2) Same process. 1st LLC will go into "Campbell LLC-Series A", property 2 will go into "Campbell LLC-Series B" etc (I just called it Campbell LLC, you would obviously call it whatever you named your LLC)
3) Yes but every series will use the same EIN. Just fill out the forms on the IRS website to get the EIN
4) Yes create a business checking account. Yes you will also need your certificate of formation, operating agreement, franchise tax info(if applicable in IL)-basically just bring the company book with you. You should probably open 2, one for expenses and one for security deposits. Keep it separate from personal expenses to maintain the veil and the liability protections.
Thank you @Peter M. , what great / clear answers. I have a follow up question - note I own these (3) properties outright - 2 have tenants in them, 1 we will start rehabbing tomorrow:
Regarding 2): So I will create these (3) series first, and the three properties I have now will General Warranty Deed over to these Series? I believe that is what you are saying but wanted to confirm. Also, would you suggest using the suffix "-Series A,B,C" or was that arbitrary? Should I consider "Xesturgy LLC - 215 Woodcrest" for example? Thats the LLC name / space / dash / street # and name...
Series LLCs (actually regular LLCs for that matter) differ by state so what is true here for me may not be the case for you in IL. I don't want to give you the wrong advice so I am not sure how to answer this. I actually looked on Wikipedia quickly and it mentions that IL has a different structure for series LLCs than most states. You probably need to ask an attorney. In fact, you should be using an attorney to set this up because it is much more complicated that LegalZoom would have to believe to get the proper asset protection.