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Updated almost 5 years ago on . Most recent reply
Can LLCs own rental property in other states?
BP Community,
This should be an "easy button" question, but couldn't find a direct post/forum. I have a Wyoming LLC. Can I use this LLC to own single family rental properties in other states? I know the answer is "yes," but I guess I'm asking how have others done it, and what are some considerations. I specifically have 7 properties across 5 states. Some options I've seen so far:
a) Each state (or even property) has it's own LLC and the Wyoming LLC is the single-member of each of those. Seems like a lot of excess state filings
b) Each property held in a trust owned by the Wyoming LLC
c) Wyoming LLC files for foreign business license in each state
d) Is it even possible to just transfer (quit claim) title/deed for each property into Wyoming LLC directly?
Thanks all
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@Damon Wong
You can have any property owned by an LLC from any state.
However the issue is when you need to do anything in the property state like filing an eviction, contest a code enforcement action, pay state taxes, etc you will quickly learn that you can't as your foreign LLC won't be recognized by that state. Your property need to have an entity that is legally recognized by that state.
There are different ways to approach the problem.
First as you suggested you can foreign filed your LLC with the property state. Often it will cost as much or maybe more money than just creating directly an LLC in that state. Also why would you want to put all your properties in the same LLC. It creates more risk for you. It is much better to have each property in its own separate LLC anyway. Have this local LLC owned by a WY LLC to gain the charging order protection and get only one tax filing.
Second you may use a land trust in the property state. It won’t add any asset protection and it may not work in every state.
Last you can use a property management company in that state instead. This company will be the one doing business in the state.
Also you mentioned doing a quit claim deed to transfer the property. Please don’t. Use a warranty deed instead to avoid creating title chain problem and also maybe voiding your title insurance.