All Forum Posts by: Megan Templeton

Hi there! @Rick LaFleur,

While its not legally required, it is a good practice. I would recommend moving the property into an airbnb as well.

Thanks,

-Megan

Hi there!

We recommend a dual LLC set up. I would recommend one operations LLC to manage your properties/business activities with. This LLC will be a shell LLC that holds not assets but is your public facing entity. The point of this is so that if you are sued, you will be sued with your LLC that contracts with third parties but it doesn't hold an assets so there is nothing for a litigant to recover. In addition to the operations LLC, you will need an asset holding LLC - I recommend the series LLC (or DST if in CA). The series LLC will allow you to place one property per child series so your assets will be separated and liability minimized. The asset holding LLC will then contract with your operations LLC for property management. This set up would provide you with a scalable structure as your business grows, liability minimization by the separation of assets, and anonymity can be put in place as well.

Thanks,

-Megan

@Gene Liang

Hi there! I do recommend using an LLC for both the building process (protection from an work site issues) and for ultimately holding title to the property. The issue you will run into is that the LLC will be subject to thr $800/yr franchise tax in CA. Another option would be to go with a DST - the DST will save you money in the long term and will help with minimizing liability if you decide to scale with additional properties (each asset could go into its own cell to isolate from other properties and any associated liability). Whether you ultimately decide to go with the LLC or DST, I would recommend some type of entity for working with 3rd parties and ultimately tenants to ensure you are protected personally.

Thanks,

-Megan

Hi @Jacob Trogan,

The only recommendation I would have is that you need to consult with a lender to strategize.

Thanks,

-Megan

Hello @Franchesca Tejada,

Hi there - there a couple ways to structure it but lets first start with the reasoning behind it.

Thanks,

-Megan

Hi there! Property can be owned remotely without the need for a filing in the state of the proeprty. For that reason, we typically recommend using an LLC where the fees and maitenance are low impact. I would also consider your future biz plans - do you intend on purchasing more properties. If so, how quickly will you acquire them and where would they be located? TX actually has some of the best rates and easy to maintain LLCs. Based off of the info you provided here, I would recommend TX. While NC could be used, since TX has the best rates and filings, TX would be a good fit for these proeprties. If you intend on having a larger scale portfolio, I would recommend chatting with an advisor to scope out a plan for how to scale efficiently. Feel free to connect with me, I would love to help.

I would recommend getting the property into the LLC. This will minimize liability but open up lending opportunities for you as well.

I would recommend a PO Box or virtual mailbox. It will provide anonymity and create distance from tenants and your personal info.

If you dont want to set up an LLC to hold title to your property, I would stil lrecommend an LLC for your operations. This would be a shell LLC only used to interact with third partties such as tenants. It will provide some protection in that if the tenant sues, they will sue who they have a contract with initially (your operating company). If so, I would recommend a business checking account but keep the balance low (distribute execess proceeds to yourself). Any nationally chartered bank should be able to assist. Your financial accounts don't have to be at the same bank. Feel free to connect with me! I would love to help more.

Being a California resident can be a trick when navigating LLCs with due to the franchise tax. While using an LLC or Corp to own propertly remotely wouldnt require a foregin filing in the state of the property (property can be held remotely without needing a foregin filing as its not "doing business" in the state), the issue you will run into with an LLC or corporation in CA is the yearly fee. From the CPAs we work with, just being a CA resident puts you at risk of an entity, other than trust, being subject to the franchise tax. To avoid the yearly fee, we recommend using a DST. It avoids the CA franchise tax, is scalable so you can add multiple assets under it while benefiting from the liability minimixation structure of child series' , and it can streamline your operations by using one set of books, bank account, etc. The DST can minimize liability by having each property in its own child series, streamline your operations, and minimize taxes. To ensure you are staying on the right side of state specific laws, I would recommend working with any atty knowledgable of the states laws. I would love to chat with you and connect more!