Do I need to get a CA LLC for out of state rental properties?

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Do I need to get a CA LLC for out of state rental properties?

Anna Kay
Member since 2021 · 9 posts · 1 vote

Do I need to get a CA LLC for out of state rental properties if the LLC is for the sole purpose of qualifying for a DSCR loan?

I live in California and need to form an LLC to get DSCR loans. I do not plan to buy property in California with that LLC or conduct any business activities with it. I will be hiring property managers to manage the properties I purchase out of state. If I form an LLC outside of California do I have to form an LLC in California also?

Caveat that I'm less concerned about liability protection as

-I plan to get an umbrella policy

-I don't think it makes sense to pay the annual $800 LLC fee to CA unless absolutely necessary

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Robin SimonBusiness Member
Lender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votes
3y

From a financing perspective, the answer is "No" - a DSCR lender will qualify you based on you as an individual or as an LLC in any state. With regards to the other (non-financing) aspects of LLC structure, probably best to consult a lawyer but it won't be an issue for DSCR loan qualifying

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  • Robin SimonBusiness Member
    Lender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votes
    3y

    From a financing perspective, the answer is "No" - a DSCR lender will qualify you based on you as an individual or as an LLC in any state. With regards to the other (non-financing) aspects of LLC structure, probably best to consult a lawyer but it won't be an issue for DSCR loan qualifying

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    Harpoon Capital515 Reviews
    WebsiteView Page
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  • Stephanie P.Pro Member
    Washington, DC Mortgage Lender/Broker · Member since 2016 · 4k+ posts · 2k+ votes
    3y
    Quote from @Anna Kay:

    Do I need to get a CA LLC for out of state rental properties if the LLC is for the sole purpose of qualifying for a DSCR loan?

    I live in California and need to form an LLC to get DSCR loans. I do not plan to buy property in California with that LLC or conduct any business activities with it. I will be hiring property managers to manage the properties I purchase out of state. If I form an LLC outside of California do I have to form an LLC in California also?

    Caveat that I'm less concerned about liability protection as

    -I plan to get an umbrella policy

    -I don't think it makes sense to pay the annual $800 LLC fee to CA unless absolutely necessary


    The forms you need when buying in an LLC a certificate of good standing, W9, articles of formation or organization, EIN letter and the operating agreement. If the property you're buying is in a different state than the one you're established in, you'll need to also register the LLC as a foreign entity. Usually they're registered with the secretary of state's office, but each state is different. Hope that helps.

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  • Chris Davidson
    Real Estate Agent · Boise, ID · Member since 2016 · 1k+ posts · 888 votes
    3y

    @Anna Kay short answer no. 

    Long answer if you aren't concerned about liability do you even need a llc? Also I would just look at getting it set up where you are going to be doing business over where you reside unless it is cheaper where you reside (being California it wont be).

    If you have already picked outa PM might be worth asking how most of their clients hold, but know everyone's goals and methods are going to be different than yours.

    Best of luck!

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