Partnership in different states

[Jacob Murry]

Hello - 

I tend to be wordy so I'm going to try to keep this as short as possible while also providing enough information to be able to get some valuable feedback. I currently own a 4-plex in Missouri. A friend and I are planning to partner on some properties; however, he is based out of Oklahoma and I am based out of Missouri. We will be looking to purchase properties in both areas. 

I'm wondering about creating an LLC for our partnership as the overarching business. If we created an LLC in Missouri, could that entity do business in Oklahoma, and vice versa? My idea was to have an LLC that was just for our general partnership, and then perhaps putting each home into a separate LLC for protection purposes. Does this make sense, or is that overkill? I know the alternative as far as protection goes is an umbrella insurance policy; however, with it being a partnership I'm wondering if the LLC is a better idea - since there's an extra layer of protection needed as opposed to owning a home outright as an individual.

We are exploring different financing options, but the most likely scenario is that the loan will be in the name of an individual and in this case we would just do a quick claim deed to move the home into the individual LLC. (I understand why this may seem like a bad idea - this isn't particularly the part I'm seeking advice on.) In this case, though - is it even necessary to have an overarching LLC just for partnership purposes, with no properties in the name?

I hope this isn't just unreadable word vomit.. Trying to get the information out of my brain and into a paragraph question in a readable format.. 

Thanks for any help :) 

[James Rainwater]

@Jacob Murry Good questions. I think it's a good idea to get some feedback here in the forums, but for what you are looking for, which is mostly asset protection, I'd find a good asset protection attorney in Missouri and run this past them for their opinion. I have great attorney relationships in many states, but not Missouri or Oklahoma. Most of the time, my clients opt to create the LLC in the state they are conducting business, but there are sometimes reasons to register in another state.

From a tax perspective, you can have the parent LLC as a partnership that wholly owns the child LLCs that actually own the properties. The child LLCs would be disregarded entities and you'd only have one tax return for the partnership/JV.