How to place property in an LLC

Question

We own four rental properties in central Florida and have had some conflicting views on how to protect them via an LLC. Initially we were going to get a separate one for each, but then a well-known real estate investment guru my wife has ghost-written some material for suggested we should put them into a single LLC holding all four properties in separate land trusts. Since then we have consulted a local real estate attorney who consider the LLC/trust scenario an overly complicated one, and that we should just go with our original notion of simply having separate LLC's for each property.

Has anyone ever gone the land trust route? The lawyer felt that it would still work, but he was wary of the fact that a judge might view the situation with suspicion down the track if we were ever sued - I thought it a little odd to say that, because either option is all about asset protection.

James Miller · Answer

One LLC for each property is a little overkill. Why not form a series LLC in a jurisdiction with strong Series LLC laws like TX or NV, register that Series LLC to do business in your home state, and then form a home-state traditional LLC to be the "management" company? Two companies, hugely more protective from a liability standpoint, and much simpler from a book keeping standpoint than 5+ LLCs. Trusts typically don't create any liability protection if self-settled and/or revocable; I use trusts in my practice for anonymity purposes mainly.

Talk to a lawyer in your jurisdiction about a scenario like the above.

Justin Windham · Answer

@Tim Wilderbeeste Taylor is referring to a registered agent- someone in the state of the LLC organization to accept official service. Typically, if an LLC member or manager lives in the same state the LLC is formed in, he will name himself as registered agent. @Taylor WestIf this is not the case, a registered agent service can be used. They can often be found for $50 - $100 per year.

James Miller · Answer

I'm not licensed in California so I can't answer that question. And your question is really different than the earlier thread. Land trusts don't give liability protection.

Raymond B. · Answer

@Tim Wilderbeeste,

To make the @ work, do the following: Hold down the shift key and type @? Look below this Window, and you will see a list of names of people that have posted in this thread. Click on the name of the person that you want notified via an email, that you responded to them. If you are a Colleague with anyone that has NOT posted in the thread, and you want them to see your post, hold down the shift key, type the @ and the first 4 letters of their First or Last Name. Then look below this Window and click on that person's name. Raymond

Romy Patel · Answer

Series LLC's also require separate books for each sub-entity as per my understanding...

Tim Wilderbeeste · Answer

Oh okay, I think I've read up on the matter before now that it's been clarified. So if I read this correctly, we find an agent in one of the applicable states to act as the representative for the holding LLC, and then register a subsidiary LLC here in Florida  to manage the properties? Just want to be clear so that we know our options when we approach the R.E. lawyer we've lined up to see next week.

Dare I ask which of the applicable states would come most recommended, or are they pretty much on an even keel?

Jerry W. · Answer

By law you must have a registered agent who resides in Wyoming with a wyoming address in order to form or maintain a business entity.  There are companies who do it, some attorneys do it, and occasionally a real estate agent will do it if you use them for buying property.

Taylor West · Answer

Tim,

@Justin Windhamsaid it correctly: register-agent

http://www.bizfilings.com/learn/which-state-incorp...

https://www.sba.gov/content/limited-liability-comp...

Tim Wilderbeeste · Answer

Hi Taylor. If you get any closer to determining the optimum state to establish the LLC I'd certainly appreciate the knowledge. Not exactly sure what you mean though on the score about the lawsuit and 'formal' acceptance.

Taylor West · Answer

@Tim WilderbeesteThank you for posting this.  I am currently researching LLC's myself and have found Nevada, Wyoming, and Delaware to be the better states; however, I do not have/know someone who can formally accept paperwork if a lawsuit was to come up.

@James MillerThanks for the Series LLC lead.  This form of an LLC might work for me and the investors I might work with in regards to multiple investments, but keeping the assets separate.

How to place property in an LLC

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