Partnership Structure - Living in CA and Investing Out of State

[Stu Owens]

Hello!

Hoping to get some input on the best partnership structure for my situation. I'm investing with a friend that lives in Utah, and I living in California. We plan to acquire 2 townhouses in Utah by the end of 2018, and are 50/50 partners. We have been looking into setting up an LLC in Utah; however, from my understanding, I would also need to register this LLC in California.

Is setting up an LLC a good idea, or would you suggest we take a different route?

Thank you!!

Stu

[Matt Ward]

@Stu Owens Congrats on your soon to be investments! Based on the info you've provided, why wouldn't you just go into each property as TIC and both you and your friend each own 50% of each property? This makes it much easier to divvy up income and expenses and later if you or him wanted to get out of one or both properties, there is less mess. Putting them into a LLC (or each into their own) creates extra cost (tax and lawyer fees), and you are by definition investing in the LLC which then owns the property(s), not investing in the properties directly. Consult your Tax Pro!