New to Bigger Pocket, and the real estate investing community. I had a question in regards to a beginner investor starting out. Currently in the process of forming a LLC to encompass my future real estate purchases. I wanted to ask if there are any pointers or recommendations when forming my LLC that any of you may have? I have read and watched several videos on anonymity in the rental property business and wondered if this was an issue that any of you feel warrants utilizing an attorney as the registered agent? Thanks!
@Nathan Goodlove I'm not sure if it's necessary to use an attorney as a registered agent, but it's probably a good idea to consult with one before you attempt to do something inherently legal such as asset protection.
If you call the state of Iowa, they will walk you through the steps to form your own LLC- it's a $50 fee to the state. It's really easy. The caveat to that is, ask your lender what paperwork they need from your LLC for your financing (operating agreement) - you could have your attorney draft it, or again, you could have it done on legal zoom.. This is a route to consider if you are starting out and buying SF's. If you are entering a partnership, or a bigger property, I would have an attorney do all of the work. Generally $500.
Also, call your insurance company and ask how many properties can be insured under one LLC. Our insurance company only allows 4 props per LLC. So we create a new LLC, after we have 4 properties. This also has the benefit of reducing liability to our other properties, held under other LLC's. Our friends just suggested we looked into series-LLC- I'm going to research that and see if that's a better approach going forward.
You can do a reverse entity search and find the owner of any LLC in Iowa- so you can "kind of" stay anonymous, but not all the way.
Nathan, I just set up an LLC in Washington. I think there is so much info out there it can be frustrating. This is what I did.
1. Watched YouTube. More specifically I watched 180 law group LLC. Co. The lady on there runs the “all up in yo business” series. She is an attorney and talks about all things LLC. Super funny and knowledgeable.
2. Went on legalzoom and set it up. I purchased the most basic plan. Everything else that was on there more expensive plans seemed like fluff.
3. Started putting assets into it. Started a bank account, ein number, changed all the expenses to that account, refinanced property into the LLC etc.
I am the registered agent. I didn’t want to pay for that. I made 100% sure it looked like a separate entity.
**** I am not a lawyer and information is for entertainment purposes only.****
What is more important than anonymity is working with an experienced attorney to form the entity, and asking a lot of questions about how to maintain the corporate shield once you are operating on your own. There are small details along the way that are important to understand and are too easy to miss while researching on the internet. Google and YouTube are great places to get background information and find out what questions to ask, but when it comes down to the details of daily operation you need someone on your side that is working with this everyday.
Thanks for all the great information!
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