Could use some advice on LLC

[Kendall Vrana]

Hi, all! 

@Raymond Northcutt and I are looking into beginning an LLC, and we have more than a couple questions. We've started doing our own research, but have a lot to learn and were looking for some help. Ray just closed on his first investment property, so getting protected is our main goal.

Here's just the tip of the iceburg: 

1. If we set up so that the parent LLC is a member of the "baby" LLC, can funds from the parent LLC be used for the baby LLC? We are thinking of having a number of baby LLCs depending on the region or type of property.

3. I read something about "split equity" between the parent and baby LLCs, and have tried to track down some more information without success. How does this work? The quote is as follows: 

"Try 'equity split' to protect your assets. This is a method to group all or number of properties in #1 LLC, then create #2 LLC that holds the note for all the equity in #1 LLC." (Thanks, Denise NA!)

4. Where should we establish our parent LLC? We currently live in GA, but have plans to move out west in the near future. I see that Texas, Nevada, and Delaware are recommended; what are the advantages of these states?

I'm sure more questions will arise, but this is where we are started. Thank you so much for your help, in advance! 

[Rick Baggenstoss]

Since you're just staring, just set up one LLC. After some success and your focus narrows, you'll be ready for the parent to have babies.

You really have to keep things simple while you're starting.  Your business focus is likely to evolve a lot in the first couple of years as you learn and experience the myriad of ways be successful in real estate.