Question from a Newbie about forming an LLC

[John Geiger]

Hi all. My first BP post! I am just starting out as an investor. I live in Texas and I have 3 homes I'm buying and renting in Macon, GA. In the process of forming my LLC, I secured a registered agent in GA. I'm probably buying here in Texas, too.

Question: Should I form my LLC in GA since I'm certain I will need it there and then add a reg'd agent in TX when the time comes? Or, should I form my in LLC in TX (I could serve as my own reg'd agent; might make tax filings easier?).

Any advice is appreciated. Thank so much

[Brenden Mitchum]

Hey @John Geiger, welcome to the BP community!

Sounds like you've already gotten some great advice on your original question. That's what I've typically heard as well: register your LLC in the state you're investing in. Down the road, especially if you expand to multiple markets, you can have a holding company in whatever tax-friendly state you want but in the beginning it's probably best to keep it simple. Plenty of other challenges to worry about without adding unnecessary complications. Definitely get with your tax-advisor though as you grow.

On Macon vs. Atlanta, at the most oversimplified level, you're looking at cash flow vs. appreciation. You're also looking at a way lower entry requirement in Macon. So if you're low on cash and not looking to get creative with financing, Macon could be the way to go, especially if your focus is cash flow. That being said, the advice here on having a strong team is absolutely true. I'd argue that this is a necessity in any market as an OOS investor. Nothing wrong with scooping up one property as you're building your team but until you have that solid team, your growth & success will be very limited. 

All that being said, if you have the capital or financing options, don't count out Atlanta. There are creative ways of finding cash flow here - you just need to know where to look. Again, having those local connections is so important for this reason. It's easy to look at some homes on Zillow and say "there's no cash flow here." That's just the surface though.

Hope this helps a bit. Please, feel free to reach out anytime if you have other questions or just want to chat!