Invest with Partners - do I need to set up LLC first before offer

[Li Tolentino]

Hi, I am new to real estate and looking to buy an investment property with two partners. We want the property to be titled in the name of LLC, for legal protection and also for personal reasons.

1) What is the best state for LLC? The partners from California and North Carolina. I also heard California is not the most business friendly.

2) Does the LLC need to be set up first before we can start putting in offers? What happens if we form a LLC but we can't find a good deal to buy, then do we still need to file the income tax return for the LLC and issue K1 for every partners?

[Tyler Mullen]

@Li Tolentino

Sorry, I have no expertise on LLCs outside my state.

Make sure if you offer before an entity exists you give yourself enough time to have it created. Even creating a new LLC as a copy from a previous one... people still take time to read it, maybe have their own attorney review it, then sign it around and then you file with the state...most approve quick if there are no issues that pop up. I'd imagine out of state could easily add more time/complications with time zones and such.

I just went through this and there was an error in our OA and then the attorney was sick for 4 days so you have to plan for the worst case scenario.