Real Estate LLC structure with Holding Company?

Question

Hi all,

I currently have 4 properties.

One SFH in Memphis in a Memphis LLC

One SFH in Dallas in a Dallas LLC

Two Duplexes in Dallas in a NEW JERSEY LLC

Here are my questions if someone can help.

1. Does the LLC HAVE to be in the state where the property in located? i.e did I make a mistake placing the Dallas duplexes in a NJ LLC?

2. Do i just form a Wyoming or Delaware Holding company LLC and place the other 3 LLCs under it for maximum liability protection? Is that how its done - just making sure i'm doing this right. How are they slid under the Holding Comapany LLC (is there a question asked during the formation that allows the other 3 LLC's to be added under the Holding company?)

3. Wyoming or Delaware for the Holding Company LLC? I have a Medical LLC also that I may want to add under the Holding Company as well.

Thank you for any guidance!

Greg Scott · Answer

I'm not a lawyer, but I know for sure that the property does not have to be in the same state as the LLC.  However, you typically must register that LLC in state where the property is as a foreign entity and you must have a registered agent in that state.  Registration and registered agents cost time and money.

Regarding your other questions, are you sure you want all that structure for relatively small assets?  It seems way overblown to me.   Every time you set up an LLC you need to keep it active and maintain corporate formalities.  It takes money and time.  If you don't do that properly, you might as well not have the entities anyway as they will be swept aside in a lawsuit.

David M. · Answer

@Mohammed F.

Of course, your should consult a proedessional...

The main/only issue with an out of state LLC that isn’t registered as a foreign entity in that state is you won’t be able to go to court.  The state courts will throw out your filing since your “entity” doesn’t legally exist on that state...

For your anonymity, yeah basically you form the WY LLC, then have the WY LLC own the other LLC’s you form.  If your transfer ownership of the other LLC to the WY LLC, I think you may lose some to all of your anonymity.  For example, in NJ the articles of formation never change, so the very first owner(s) and address is fixed for the life of the company.  You can make changes of course, but those are filed as amendments (or whatever the official term). So, you are limited to how the other states handle it.  Somebody could figure out you own the WY LLC by looking out who was the original owner of the out of state LLC.

I suppose you could roll your medical LLC into your structure, but honestly, why?  More anonymity?