Real Estate Investor · Alexandria, VA · Member since 2016 · 2 posts · 0 votes
Hi Everyone,
I had a general question about starting an LLC as an active duty member of the military. Being in the military, we move frequently, and with that, I am due to transfer again this summer, likely to the Washington D.C. area. My question is whether or not I should start an LLC now and be ready upon my transfer, or if I should wait until I find a deal, and subsequently start an LLC in the same state as the property? Washington D.C. obviously also has Virginia and Maryland as prospective markets and there is a possibility I would transfer again at a later date to another part of the country. I'm far from a CPA or lawyer, but from what I can tell, Wyoming, Nevada and Delaware may have advantages to register an LLC in, but I'm also not sure if having an LLC in a separate state from your properties overcomplicates taxes. Any insight is greatly appreciated!
@Steve Moyer, welcome to BP. I am also active duty military. I would hold off on the LLC until you find the property and start working the deal. An LLC can be set up in one day and registered in a couple of weeks in most states. My opinion is don't put the cart before the horse. Additionally, as long as you carry enough insurance, an LLC should not be the priority. Analyzing and making deals should be the priority.
Wait. It takes a lawyer 5 minutes to draft up the articles of incorporation and maybe 2 weeks for you get everything back from the secretary of state. No sense in paying the fees and complicating your taxes until you absolutely have to.
@Steve Moyer, welcome to BP. I am also active duty military. I would hold off on the LLC until you find the property and start working the deal. An LLC can be set up in one day and registered in a couple of weeks in most states. My opinion is don't put the cart before the horse. Additionally, as long as you carry enough insurance, an LLC should not be the priority. Analyzing and making deals should be the priority.
@Steve Moyer I'm understanding your dilemma here. Your actual concern has nothing to do with LLC formation but the fact that you move a lot. From what I understand, each state is different and you'll have to look into the state's rules about continuing to operate the LLC even though technically you are not a resident there. Being in the military this could happen to you many times. I am assuming that much like in Arizona, you would have the option of appointing a statutory agent (who is a resident there) to the LLC and operating it in that manner even though you have been stationed somewhere else. I don't think you should take advice from any one person here. You should dig into the corporations regulations of Pennsylvania and find out what you're allowed to do as someone who may not be there a year or two from now but still wants to run an LLC in the state.
Welcome to BP! Like others said, I don't think you need to incorporate an LLC now unless you have a good reason to do so.
My thought is that it makes sense to first decide where and how you would like to invest. Once you get a clear picture there, you can start thinking in greater detail about what you need.
Notably, once you get a clearer picture of your plans, you will need to start building your real-estate team. That team will include attorneys and CPAs. So while you are looking to build your team, you should have an opportunity to talk to attorneys and the CPAs about the pros and cons of incorporating in a certain state. Most professionals would be happy to provide you with a quick advice without a fee. And at least in the area I invest in, many professionals are more than happy to go above and beyond for active and past military members. With that in mind, I would save on the incorporation fees for now.
Hold off on the LLC, you do not need one to invest in real estate or to protect your interests. Many investors do have a LLC, about 50%, but it does make investing more difficult and more expensive. You can protect yourself starting out just as well with adequate insurance, which you need anyway, and make your investing life much easier.
Many see a LLC as sociological protection as opposed to financial protection. You will not likely find any investors starting out that have actually required the protection of their LLC.
IF there are any on BP that have actually used/needed the protection of their LLC please speak up.
@Steve Moyer, welcome to BP. First let me thank you for your service. The filing in WY is very easy, can be done online through the secretary of state's website and is $100 for corporation or LLC. First in order to be a registered agent in WY you must reside there. That is the point in having a registered agent. Next having an LLC can help your liability. The entity needs to be set up right, and run right. Not everyone does that. Having an LLC does increase your costs a bit and adds paperwork. You need separate checking accounts, annual meetings and state filings, you file separate tax returns and take a K1 etc. Insurance and doing good business will help limit your liability, the question is will it be worth it to go through the time, cost, and labor of setting one up before you decide real estate is your thing. The more passive your role is the greater protection they provide. An LLC will not protect you from liability from your own actions. It would take a lot of time to explain it all to you. You might look up some older threads on the topic. There are a lot of pros and cons involved.
New to BP as well as Real Estate and I am very happy to have stumbled upon this information filled website/forum.
A quick background, I am active military with a little over a year left (woohooo!), and would like to get into real estate after I finish my deployment which is soon. I have been doing a lot of research on the subject like reading, listening to podcast, etc. and am starting to get a grasp on the scope of things. With my real estate partner @Manuel Reyes, we plan on investing in a du/tri/quadplex in the very near future in NC specifically Charlotte.
Where this thread comes into play is concerning the LLC. We have looked a good deal into the subject, and believe that it would be a good idea to have one in place for protection. Now, after reading the thread, would it be best to hold off on creating an LLC until we have our first property? We figured that it would be better to err on the safe side but from my understanding of what has been said, it would be best to hold off to minimize cost, correct? If this is true, how many properties would warrant the use of an LLC?
Thank you for the insight and knowledge! Very happy to have joined this elite community.
I am recenlty Active Duty as well, had a small soap business that I didnt continue? Can i use the same LLC and change it? If not, how do I start my LLC now from Germany just to get it started? Are there companies that will help a military member get set up online? Thank you all!
I am recenlty Active Duty as well, had a small soap business that I didnt continue? Can i use the same LLC and change it? If not, how do I start my LLC now from Germany just to get it started? Are there companies that will help a military member get set up online? Thank you all!
I have started a new passion and want to get started!