What state do i set up LLC?

[Vincent Logaras]

I live in NJ and I am looking to buy an investment property PA. Where do I set up the LLC?

[Scott Smith]

Originally posted by @Vincent Logaras:

I live in NJ and I am looking to buy an investment property PA. Where do I set up the LLC?

The general answer for this type of question would be: wherever you can get the strongest protection paired with the least cost (financial cost and corporate maintenance requirements.) The trick to this is that if you have an LLC in a state separate from the investment you will have to pay "foreign filing fees." Many people will elect to form an LLC in the same state as the investment for that reason.

You can avoid the foreign filing fee through the use of a Land Trust, which is pretty cheap to establish, allowing you to establish the LLC in the optimal state and then use the Land Trust to operate the asset in the state you are investing in. The land trust would just have the LLC listed as the beneficiary.

The answer really just comes down to "it depends." I would recommend you sit down with an attorney/CPA who is experienced with real estate investing to get a better idea of what fits your needs best, since there really are a lot of options. But the rule should be about the same: you want the one that is cheapest and easiest to operate.

Sorry if that was a bit of a roundabout answer. If you have questions just TAG me and I can clarify! I work with these entities often, so don't hesitate to ask!