Purchasing Real Estate with an out of state LLC

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Purchasing Real Estate with an out of state LLC

Blaine Moore
Rental Property Investor · Mesa, AZ · Member since 2017 · 45 posts · 13 votes

Does anyone know the repercussions of purchasing a property in Ohio, with an Arizona LLC?

I would purchase the property with my AZ LLC, then refinance after six months in my name, releasing title out of the LLC.

I know, I've also been told to just an Ohio LLC, but is that really necessary?

Your help is greatly appreciated!

-Blaine

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Pamela Sandberg
Realtor / Attorney · Phoenix, AZ · Member since 2018 · 388 posts · 265 votes
6y

If you don't at least register the AZ LLC as a foreign entity in Ohio, the Ohio courts may not offer you the protection of an LLC. This means that an Ohio tenant could go after your personal assets if they got a judgment against you.

IMHO, it's worth it to either start an Ohio LLC or register the AZ LLC as a foreign entity in Ohio (see a local OH lawyer if you have questions about foreign registration).

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  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    6y
    Originally posted by @Blaine Moore:

    Does anyone know the repercussions of purchasing a property in Ohio, with an Arizona LLC?

    I would purchase the property with my AZ LLC, then refinance after six months in my name, releasing title out of the LLC.

    I know, I've also been told to just an Ohio LLC, but is that really necessary?

    Your help is greatly appreciated!

    -Blaine

     I have some real estate lawyers in Columbus, Ohio you can reach out to

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    1Reply
  • Pamela Sandberg
    Realtor / Attorney · Phoenix, AZ · Member since 2018 · 388 posts · 265 votes
    6y

    If you don't at least register the AZ LLC as a foreign entity in Ohio, the Ohio courts may not offer you the protection of an LLC. This means that an Ohio tenant could go after your personal assets if they got a judgment against you.

    IMHO, it's worth it to either start an Ohio LLC or register the AZ LLC as a foreign entity in Ohio (see a local OH lawyer if you have questions about foreign registration).

    4Reply
  • Account Closed
    Real Estate Investor · Waldorf, MD · Member since 2014 · 592 posts · 320 votes
    6y

    Hey @Blaine Moore What were you thinking about purchasing?  I'm investing in Cincinnati and I'm looking to connect with me investors in the area.

    0Reply
  • Blaine Moore
    OP
    Rental Property Investor · Mesa, AZ · Member since 2017 · 45 posts · 13 votes
    6y

    @Remington Lyman Please send me those contacts and thank you sir!

    0Reply
  • Blaine Moore
    OP
    Rental Property Investor · Mesa, AZ · Member since 2017 · 45 posts · 13 votes
    6y

    @Pamela Sandberg Thank you so much!

    0Reply
  • Blaine Moore
    OP
    Rental Property Investor · Mesa, AZ · Member since 2017 · 45 posts · 13 votes
    6y
    Originally posted by @Remington Lyman:
    Originally posted by @Blaine Moore:

    Does anyone know the repercussions of purchasing a property in Ohio, with an Arizona LLC?

    I would purchase the property with my AZ LLC, then refinance after six months in my name, releasing title out of the LLC.

    I know, I've also been told to just an Ohio LLC, but is that really necessary?

    Your help is greatly appreciated!

    -Blaine

     I have some real estate lawyers in Columbus, Ohio you can reach out to

    0Reply
  • Kris Wong
    Rental Property Investor · Austin, TX · Member since 2016 · 361 posts · 394 votes
    6y

    It comes down to comparing the up front and ongoing costs/time of forming a new LLC, which would likely be more expensive due to needing to draft a new operating agreement, vs. registering as a foreign entity, as @Pamela Sandberg points out. I can recommend an attorney in Cincinnati, if that's where your property is located.

    0Reply
  • Slocomb Reed
    Real Estate Agent · Cincinnati, OH · Member since 2014 · 170 posts · 102 votes
    6y

    @Blaine Moore there have been some good responses to your question already. The only thing I'd add is that if you're investing out of of state and you don't have a local partner where you're looking to invest, it'll be more difficult to get commercial financing. Portfolio lenders tends to make underwriting decisions in real life sitting around a table as opposed to letting computers calculate borrowability for them, and most of them won't lend to non-local borrowers. This doesn't directly relate to your LLC question, except that an Arizona person with an Arizona company won't be considered as favorably as if there were an Ohio person involved in ownership.

    1Reply
  • Marlen Weber
    Specialist · Plano, TX · Member since 2020 · 2k+ posts · 861 votes
    6y

    @Slocomb Reed great information. Thanks for sharing with us. 

    0Reply
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