Setting up LLC out of state

[Karthik Natarajan]

Hi All 

Looking to guidance on setting up LLC.

I have one property in California and looking to purchase a second one out of state in Omaha or Georgia. I woudl like to move my current property under a LLC and purchase the other ones on that LLC. have a few question on setting up the LLC.

1. Setting up LLC in California and maintaining it I believe is ~$800 a year. So can I setup the LLC in a different state like GA or NE as those seem to be more cost effective? What are the pros & cons of setting up LLC out of state.

2. What would be the recommendation for the number of properties I setup under a single LLC?

Karthik

[Hunter Reed]

Karthik, Let's say that I have 3 houses. The first house (house #1) is owned by LLC #1, the second house is owned by LLC #2, and the third house is owned by LLC #3. If a tenant slips and falls at house #1 one and sues LLC #1, my properties owned by LLC #2 and LLC #3 are protected from that lawsuit. Aside from the extra liability protection I also like to keep my books in my finances extremely organized.

For each LLC that I form I also have a new EIN and a separate bank account.

That means all of my income and expenses for each property sits within its own bank account and therefore is very easy to see which property is more profitable that the others, pay bills, and manage finances.

If on the other hand, I had one LLC that owned all three of the properties I would have to rely on my bookkeeper and/or my property manager to differentiate which property brought in income and which expenses were attached to each property. This makes both keeping and finances a little bit more cumbersome.