Properties in multiple states as a one person show

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Properties in multiple states as a one person show

Mitchell Mabee
New to Real Estate · Lee's Summit, MO · Member since 2019 · 6 posts · 5 votes

I'm in the military and I already own one property under an LLC in Missouri. I've been lucky enough to get orders to Florida where I now also own a house. I'm planning on renting it out in the future, but I have a few questions on owning properties in multiple states:

- First and foremost, is there anyone I should be asking these questions to, like a lawyer or CPA?
- Should I keep my Missouri LLC and use it in Florida as a foreign entity? Should I create an umbrella LLC? How does that work?
- What are recommendations on using one bank account/accounting software vs individual accounts?  Reminder that I'm one person trying to do it all, so ease of use is important
- Anything else that I might need to know to run multiple properties in multiple states?


Thanks for any and all help!

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Doug Spence
Investor · San Diego, CA · Member since 2016 · 1k+ posts · 975 votes
2y

@Mitchell Mabee I'm also active duty military and I own several rental properties in different states. 

-Yes you should hire a CPA to handle your taxes now that you own multiple properties in different states.

-You don't need to own properties within an LLC. I own some properties in my personal name and some in an LLC, but you can have adequate liability protection via the property's landlord policy and an umbrella insurance policy. Its much more cost effective than creating and maintaining an LLC for every property. Plus, you'll get better financing by getting mortgages in your personal name.

-I use navy fed for the banking for my personally owned properties (I have one checking account for three Milwaukee properties, and one for my Pensacola property) and for the properties owned by the LLC, I have a business checking account via Chase to handle those. I don't recommend chase though, I would go with AMEX for business checking if you go the LLC route. I use AMEX for a different business account and it was way easier to set up.

Good luck and let me know if I can help with anything. 

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  • Doug Spence
    Investor · San Diego, CA · Member since 2016 · 1k+ posts · 975 votes
    2y

    @Mitchell Mabee I'm also active duty military and I own several rental properties in different states. 

    -Yes you should hire a CPA to handle your taxes now that you own multiple properties in different states.

    -You don't need to own properties within an LLC. I own some properties in my personal name and some in an LLC, but you can have adequate liability protection via the property's landlord policy and an umbrella insurance policy. Its much more cost effective than creating and maintaining an LLC for every property. Plus, you'll get better financing by getting mortgages in your personal name.

    -I use navy fed for the banking for my personally owned properties (I have one checking account for three Milwaukee properties, and one for my Pensacola property) and for the properties owned by the LLC, I have a business checking account via Chase to handle those. I don't recommend chase though, I would go with AMEX for business checking if you go the LLC route. I use AMEX for a different business account and it was way easier to set up.

    Good luck and let me know if I can help with anything. 

    3Reply
  • Sean HudginsPro Member
    Real Estate Agent · Chesapeake Va · Member since 2019 · 150 posts · 100 votes
    2y

    A CPA is a must for your situation. As you start to expand to different states, the tax situation gets a little more complicated than you might want to deal with on Turbo Tax. 

    I would seek out the advice of a lawyer on the LLC formation, but personally, I don't put too much weight on the LLCs until you have several properties. Until you get a couple of properties, often the LLC may just complicate things more than it helps protect you. Get some great insurance and leave the Missouri property as it is in the LLC. But a lawyer is going to better inform you on the LLC issues and how to make sure you don't end up doing something wrong in the operation of that LLC because, after all, the LLC does no good if it won't be upheld in court.

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  • Mitchell Mabee
    OP
    New to Real Estate · Lee's Summit, MO · Member since 2019 · 6 posts · 5 votes
    2y

    Thank you for the replies, they were very helpful.  @Doug Spence, I actually just bought a house in Pensacola for my next assignment.  Do you have a CPA in the area that you would recommend, or do you work with one remotely?  I currently have a CPA, but he is so busy that having him answer any questions is like pulling teeth.

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  • Doug Spence
    Investor · San Diego, CA · Member since 2016 · 1k+ posts · 975 votes
    2y

    @Mitchell Mabee Your CPA can be anywhere in the country, unless you want to be able to chat with him/her in person. But since you're military, I'd just plan to hire a rockstar CPA, regardless of location. 

    My CPA is not adding clients right now but my bookkeeper does peoples taxes as well and she could totally handle a portfolio like yours. Happy to make the connection if you like. 

    0Reply
  • Matt Jones
    Real Estate Agent · Pensacola, FL · Member since 2014 · 379 posts · 307 votes
    2y

    @Mitchell Mabee

    Congrats on getting to multiple properties!  I'm sure you'll love Pensacola, it is a great town and place to invest.  To answer some of your questions:

    - Yes, I'd definitely recommend a CPA.  I'll PM you a couple of recommendations for CPA's in the Pensacola area.

    - Opinions vary on your LLC question. Personally, I create a new LLC in two scenarios. The first is when I reach 5 properties or exceed $1 million in property value I'll create a new LLC. The second is when I have a new owner involved. For example, I owned property in my personal name and a single member LLC until I got married. Now that I'm married my wife and I have an LLC. Recently I brought together a few people and we bought a 12 unit property together, we created a new and separate LLC for just that property and ownership group.

    - For simplicity I have one bank account for the investing that I do personally or with my wife, an operation account. I have a savings account for those properties where I keep my buffer plus I use it as a sinking fund for taxes and insurance. We did open a separate bank account at a different bank for the 12 unit property to make it easy to keep things separate.

    - As far as other things you'll need to know: Those will vary by your personal situation and whether or not you are self managing.  If you are self managing the first thing I would do is familiarize myself with the landlord tenant laws in your new location.  Other than that just having the people and resources to help you answer questions as they come up should be fine. 

    Good luck and feel free to reach out if I can help you with anything!

    0Reply
  • Daniel HymanBusiness Member
    CPA · Milwaukee, WI · Member since 2016 · 2k+ posts · 1k+ votes
    2y

    I recommend reaching out to a tax professional for advice. There are some complexities with multiple states but nothing a competent real estate focused tax pro shouldn't be able to handle. As for the bookkeeping, keep it simple until it makes sense to build out complexity. Spreadsheets or easy software like Stessa is a good place to start.

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  • Mitchell Mabee
    OP
    New to Real Estate · Lee's Summit, MO · Member since 2019 · 6 posts · 5 votes
    2y

    As I was reading back through these replies, I realize I left out some context, and came up with one or two more questions. Both properties I own are in my personal name, but I have an LLC to rent the one property out and get the benefits of a home office. If you don't use an LLC, do you rent properties out personally and claim taxes that way? And do you track business expenses the same way, via whichever software you chose to use?

    0Reply
  • Jake BakerBusiness Member
    Flipper/Rehabber · San Diego, CA · Member since 2020 · 1k+ posts · 694 votes
    2y

    @Mitchell Mabee 

    I agree that it is time to hire a CPA. Most CPAs charge separate for Tax Preparation and Tax Advisory. Your last question probably falls into the tax advisory realm. Since you have multiple properties now, you should consider hiring a bookkeeper to manage your reporting. What are your current bookkeeping practices? A CPA won't be able to give sound advice unless you can a clean P&L for each property.

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  • Mitchell Mabee
    OP
    New to Real Estate · Lee's Summit, MO · Member since 2019 · 6 posts · 5 votes
    2y

    I'm currently using QuickBooks Online

    0Reply
  • Doug Lovett
    Investor · Tampa, FL · Member since 2015 · 63 posts · 59 votes
    2y

    When you get to Pensacola check out the PIG real estate group. One of my mentors and owner of 7 Figure Flipping Bill Allen was active with that group when he was stationed there and had good things to say about it. 

    https://www.meetup.com/pensacolapig/

    0Reply
  • Laura Newton
    Rental Property Investor · Member since 2023 · 26 posts · 15 votes
    2y
    Quote from @Mitchell Mabee:

    I'm in the military and I already own one property under an LLC in Missouri. I've been lucky enough to get orders to Florida where I now also own a house. I'm planning on renting it out in the future, but I have a few questions on owning properties in multiple states:

    - First and foremost, is there anyone I should be asking these questions to, like a lawyer or CPA?
    - Should I keep my Missouri LLC and use it in Florida as a foreign entity? Should I create an umbrella LLC? How does that work?
    - What are recommendations on using one bank account/accounting software vs individual accounts?  Reminder that I'm one person trying to do it all, so ease of use is important
    - Anything else that I might need to know to run multiple properties in multiple states?


    Thanks for any and all help!

    1. I would suggest talking to a Real Estate CPA 

    2. Foreign entity in Florida, if it's required to register (CPA can help with this)

    3. Bank of America, Accounting software: Digb, Stessa, Quickbooks. The first 2 focus on real estate

    Yes. make Sure your CPA files in all of the State you have rentals in addition to the return they file for the State where you are a resident. 


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  • Nate MeekerBusiness Member
    Real Estate CPA | California · Member since 2020 · 543 posts · 251 votes
    2y

    @Mitchell Mabee - If you haven't already done it, a living trust is necessary and will save you fees later on. Depending on the property value and your risk tolerance, an LLC setup may not be needed at the moment. Strong umbrella insurance is a must. Keeping track of expenses is the same regardless.

    Happy investing! My rental properties in Pensacola are doing great.

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  • Evan MillerPro Member
    Investor · Denver, CO · Member since 2017 · 41 posts · 21 votes
    2y

    I would just use the LLC that you already have if you are going to opt to put it in an LLC vs. under your own name. File the foreign entity form with FL if they require one and you're good to go. Minimize the number of LLCs you have to keep track of! Every new LLC is another state's tax and business laws that you have to keep up with, and another tax return to file.

    I have found opening a new bank account for each property to be super helpful. If you run everything through that account for each property then it basically does what QuickBooks would do for you. I have USAA which doesn't do business accounts though so if NFCU does then that might be the better option. If you're keeping the property under your own name, then USAA is a great option because they make opening and managing bank accounts incredibly easy!

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  • Jason Allen
    Attorney · Columbus, OH · Member since 2023 · 193 posts · 145 votes
    2y
    Quote from @Mitchell Mabee:

    I'm in the military and I already own one property under an LLC in Missouri. I've been lucky enough to get orders to Florida where I now also own a house. I'm planning on renting it out in the future, but I have a few questions on owning properties in multiple states:

    - First and foremost, is there anyone I should be asking these questions to, like a lawyer or CPA?
    - Should I keep my Missouri LLC and use it in Florida as a foreign entity? Should I create an umbrella LLC? How does that work?
    - What are recommendations on using one bank account/accounting software vs individual accounts?  Reminder that I'm one person trying to do it all, so ease of use is important
    - Anything else that I might need to know to run multiple properties in multiple states?


    Thanks for any and all help!


     Hi Mitchell,

    I am a lawyer here in Columbus, Ohio (also a AF Vet). You could use you Missouri LLC, but that would put the assets of both properties in one place in the event something unfortunate happens. I'd suggest putting the FL property in its own LLC for these Liability reasons. The umbrella would be a separate entity that owns both you FL LLC and Missouri LLC. This will allow you to distinguish the costs and isolate them within each entity and write them off as appropriate. You should establish your umbrella LLC in a Landlord (and business) friendly state such as Wyoming or Delaware.

    If you have any interest interest in investing in Columbus, Ohio. I'd be glad to run some of the deals by you. We specialize in bringing cash flowing properties to out of state investors. Many of which meet or exceed the 1% rule.

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