LLC question - OTC properties (tax certificate)

[Syrica Brown]

I have a couple of properties OTC and currently have the tax lien certificate. I've been getting advice that I need to setup an LLC for asset protection. I am not sure of the purpose or if this would be beneficial for me now. I would love some direction on the questions below. Again, I'm not sure if this is the direction I should go in. Thanks in advance for responding.

1. Currently reside out of state and I'm not sure what state to form the LLC. Should I form the LLC in the state I reside or Alabama where the properties are located?

2. Since the properties were purchase in my name, how do I transfer them to the LLC?

3. Should I wait until I have more properties to form an LLC? currently have 2

4. Do I need an LLC for each property?

[Denise Evans]

@Syrica Brown, there are pros and cons to forming an llc. Some investors do not do it, so they can file ejectment and quiet title lawsuits themselves and not have to hire an attorney. Since you are out of state, you probably won't plan on filing your own lawsuits anyway.

You can form something new called a Series LLC that cuts down on the filing fees and accounting of multiple LLCs, but still gives you the legal benefits of multiple LLCs. You should talk to an accountant about pros and cons of that, as it relates to your personal situation. Or, you can read up about them on the internet, now that you know there is such a thing.

I think it's usually best to create Alabama LLCs if you are holding property in Alabama, but it is not required. If you create an LLC in your home state, you will have to file paperwork to qualify to do business in Alabama as a foreign entity. If you fail to do that, you will not be able to use the courts for anything at all, and there could be other repercussions.

You can transfer properties into an LLC, but it is a taxable event. That means that if you buy something for $1,000 and your transfer it to an LLC at a time when it is worth $10,000, you will have $9,000 worth of taxable gain. I think. That used to be the law. Check with an accountant about that one.