How to set up REI business

[Erin Grosslight]

Hi everyone! New to bigger pockets and have a question. I have had a rental property for 7 years that I have just kept in my personal name and claimed on my personal taxes (it was my townhouse from before marriage so just kept it as a rental). My husband and I are in the process of renovating and would like to sell, do a 1031 and buy one or two other properties in another state. My question is how should I be managing these new properties from a business standpoint?

I know there's the option of sole proprietor but since they would be in both my and my husbands name, I'm not sure if that would work. Would a LLC be a smarter/cleaner financial option?

Thank you in advance!

[Scott McElhaney]

Erin,

Transfer the property to an LLC with you & your husband as sole members. The LLC will sell the property. The new LLC will purchaser the replacement properties via the 1031 exchange. If you're buying out of state your LLC will need to fill out an SCC form giving it the ability to be a "foreign investor", which is a fancy way of saying your LLC can invest in another state. You apply for these foreign rights once you've determined what state you plan to invest in. Hope this helps!