LLC or Personal Name

[Ian Kinder]

I just bought my first investment property in my name (all cash) in the Detroit Michigan area. Before I file the home transfer affidavit and submit the shorter rental application with the city and setup utilities, should I setup and use an LLC? How do I transfer the home I purchased with my money to the LLC? Thank you.

[Dan Gandee]

Ultimately you'll want to get "legal advice" from an attorney that handles these types of scenarios for your specific state, but from my own experience here's what I did. 

1. When I was just starting out, I formed a quick LLC in Delaware or Wyoming using one of the online LLC formation companies (LegalZoom, etc) - Making sure my registered agent is not myself and listed at my own home address. In order to bank in Michigan, you most likely will need to register this LLC as a "foreign entity" (just Google the steps). I then will list the property I'm holding in the operating agreement of the LLC (that's how you identify from the LLC's organization side that you own property that is held in the LLC, and not just naming it at the county level).

2. Next, I would go to the county recording office and "quick claim" the deed from your individual name to your LLC. Once again super easy to do but just need to do a little research.

3. Next, I'd open all utilities in my LLC's name and have all the mail go to a PO BOX that I set up for my LLC(s).

4. Next, if I was hiring a property manager, I'd give him/her my EIN number once the LLC is official so that statements at the end of the year are easily completed by my accountant for K1's and Schedule E's.

As you buy more and more of the same type of property (STR's) then you will then need to decide to place the properties into a trust or create a separate LLC for each one (More tax preparation and fees). If paying cash each and every time, I'd suggest talking to a estate planning attorney and stacking those in a trust(s) for the purpose of holding all STR's.

If you begin to flip properties, then you'll need a separate LLC that is building credit and a P&L so you can navigate financing in the future. Don't mix asset classes IMO. We have them currently structured as follows:

-All STR's are held in separate LLC's under a holding company.

-All FLIP's are completed by one designated LLC that retains profit and builds credit. We pay ourselves as employees.

-All LTR's are held in LLC's and trusts only depending on the partnership structure.

-All assignments are completed by a separate LLC for risk mitigation.

-All "Subject To" are completed and held by a separate LLC for risk mitigation.

Many different ways to structure your companies, but get advice early and don't just listen to me or anyone else on here unless they are legally able to provide you the advice. Each state is diff. This is what I did, not suggesting what you should do...

Congrats and keep stacking em!