How should I set up LLC for my property?

[Jin Zhang]

Hi everyone, 

I have some questions about how to set up LLCs for my properties and would love to learn more about your expert opinion. Currently, I have two rentals. One is in California (I currently live in this state but not in this property) and the other is is Atlanta. They are currently hold under my personal name. I would love to move them into LLCs. 

1) How should I set up LLCs for them? Should I set up one for each? 

2) Since I only have two properties, should I use online LLC services? I used a company to set up a LLC for financial service business in the past. They have set up a holding company in Wyoming and also an operating company in California. Should I use this company to set up the LLC for my properties and put them under the same holding company? Honestly, I do not like this company. That is why I am thinking maybe I should just go ahead and create my own company online. On the other hand, I do have a holding company. Should I put my rental LLC under the same holding company?

3) How would move my rental into LLC implicate my insurance?

Any insights and advise would be greatly appreciated! 

Best,

Jin 

[Jin Zhang]

Quote from @Account Closed:

Setting up LLCs for your rental properties can be a smart move to protect your personal assets and provide certain tax benefits. Here are some insights and advice for your questions:

1. Number of LLCs:
   • It's generally recommended to set up a separate LLC for each rental property. This provides a clear separation of assets and liabilities between properties. If one property faces legal or financial issues, it won't directly affect the other. This separation can also simplify record-keeping and accounting.
   • Additionally, California and Georgia have different legal and tax requirements, so having separate LLCs for properties in each state can help ensure compliance with state-specific regulations.
2. Using Online LLC Services vs. Existing Company:
   • You have the option to use online LLC formation services if you're comfortable handling the process yourself. It can be cost-effective and straightforward, especially for a small number of properties.
   • If you have a holding company already established and it's well-suited for holding real estate assets, you can consider using it. However, ensure that the existing holding company is in good standing and complies with all necessary legal and tax requirements.
   • If you're dissatisfied with the company that set up your financial services LLC in the past, it may be wise to seek a different service provider or create the rental property LLCs yourself online. It's important to work with a reputable provider to ensure that all filings are done correctly.
3. Insurance Implications:
   • Moving your rental properties into LLCs may affect your insurance. You should inform your insurance provider about the change and discuss your coverage options. Typically, you'll need to switch from personal property insurance to commercial property insurance for the LLC-owned properties.
   • It's essential to ensure that your LLCs are properly listed as the property owner on the insurance policies to maintain liability protection. Failure to do so could jeopardize the limited liability benefits of the LLC structure.

Before proceeding, it's strongly recommended that you consult with legal and tax professionals who are experienced in real estate and LLC formation in both California and Georgia. They can help you navigate the legal requirements, tax implications, and asset protection strategies specific to your situation. Each state has its own rules and regulations, and it's crucial to ensure compliance with both state and federal laws.

 Wow! This is great! It has a lot of great information. Thank you for sharing! Do you have any recommendation on a legal and tax professionals who is able to help me? Thanks!