LLC for Out of State Properties

[Jason Xue]

I currently have a LLC registered in the state of Illinois. If I were to buy an out of state property, what's the best way to go about holding that property? Can I hold it in my Illinois registered LLC or should I create a new LLC in the state where the property is located? Is a Series LLC a possible solution?

[Mike S.]

There are different ways of looking at it. But most of them will tell you that you need an entity in the state where the property is, for instance if you need to evict a tenant and go to court.

You can hire a local property manager company that will act as the landlord.

You can create a local land trust.

You can foreign register you current LLC in that state.

You can create a new LLC.

As foreign registering an LLC is around the same cost as opening a new LLC in the state, I much prefer the later as it split your asset in different LLCs offering better asset protection.

I am a proponent of having one holding LLC in a good charging order protection state like WY or NV. Then this holding LLC is the single member of child LLCs in each state where you are holding property. As disregarded entities, these sub LLCs don't file taxes (at least at the federal level) and won't increase your tax burden.