Property in OH, best way to set up llc/bank to keep track of expenses/taxes?

Question

I am closing a property in Cleveland Ohio, Live in Maryland. I had opened an LLC & business bank account for in instate deal, I didn't go through it but now found a better option in Cleveland.

What is my next best step to collect rent payments, payments to property mgmt, track expenses, and pay taxes correctly? Do I use the Maryland LLC and bank account or open up an Ohio LLC, tie it to another business account, and run it that way? Or is there another way ?

Varun Kalyan · Answer

Thanks, @Bailey Coleman I would like to discuss this over a connect. Do you have time this week to connect maybe on Zoom or phone?

To one of your questions, yes I do have a PM team in place for all the in-ground operations.

Raju Balakrishnan · Answer

I had a similar question, I have California LLC, and was trying to see to add Ohaio property to that or form a separate LLC at Ohio. There is no single correct way, varies from person to person

Some pros and cons:

1. CA has a $800 tax per LLC per year, so OH LLC will be cheaper.

2. OH LLC will need a local address, so u need a local contact. Or hire someone for that increasing expenses.

3. Putting all assets in same LLC will reduce liability separation, but makes it easy to manager

4. Need to check the state law, CA LLC needs a CA bank account too.

5. CA laws are so strict so that you would have to pay CA LLC tax even if you run a OH LLC from CA.

Personally, I think holding in local state LLC is the best, unless for tax reasons or you do not want to reveal your out-of-state location.

Nate Meeker · Answer

Hi @Varun Kalyan, first thing is first, get a separate bank account! I personally use digb.com software, but sometimes all you need is excel. As far as the LLC, it varies and professional advice is recommended.

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Erin Richardson · Answer

@Deanna Trujillo - I also am considering self managing a few Ohio rentals from out of state. I have a question that others haven't been able to answer. How do you place new tenants? Do you have a realtor who is willing to do this for a fee? Any info you could provide would be appreciated! Thanks so much.

Michael Smythe · Answer

@Varun Kalyan if you hired a PMC, why do you have to collect rents, pay the PMC and track expenses?

Your PMC should be doing all that and providing you with monthly statements, as well as a year-end statement for tax purposes.

Erin Richardson · Answer

@Deanna Trujillo Thanks - I've used Zillow for my other properties, but I was there to show the prospective tenants the properties. I was more wondering how you show prospective tenants the property before they even apply to see if they are interested in the place if you're not local. Do you contract out with someone to physically show the property to prospective tenants? Thanks so much.

Deanna Trujillo · Answer

We have used Zillow to find our renters.  Potential renters fill out the info on Zillow and pay $35 to Zillow to do a simple background check and financial evaluation including debt to income ratio. These results are available to the landlord free of charge. You can also communicate with potential renters through this application. We found it to be very helpful.

Nathan Miller · Answer

If you can hire an Ohio property manager to handle the local operations that is going to be your best bet.  Remotely managing is extremely difficult and often very costly to say the least.  Ohio has some of the strictest landlord laws in the country and is very pro-tenant anti-landlord.  So either learn all those laws, and keep up with them as they change frequently, or hire a professional.

Regarding the LLC, I'm not aware that Ohio has any requirements for the LLC to be registered in state to own property so it shouldn't matter where the LLC is formed, but I'd advise you to double check with a local property management company and/or attorney to be sure.

Bailey Coleman · Answer

You are going to want to open up an Ohio LLC. You will not be able to evict a tenant if the LLC is registered in another state. The way I am set up is I have a holding company that owns my Ohio LLC. My Ohio LLC owns all my properties in Ohio. I would hire a PM as well. One that has many connections and knows the Cle market. Let me know if you have any more questions or if you need assistance with setting up an LLC.

Lorien Rollins · Answer

Varun!

It really depends on your comfortability in managing your assets. Do you want to be hands on or hands off? I own 1 LTR in Denver, NC and manage it myself. I hire a CPA for tax time but run everything myself. I have an LLC, a business bank account strictly for the house, and utilize PayRent.Com for the tenants payments. It is powered through WePay by JP Morgan. This software/platform is extremely user friendly (to landlord and tenant). You can post transactions with memos, credits, download the csv file for everyone's convenience / record keeping is a BREEZE!! And DD to your bank account daily, weekly, or monthly.

I am a seasoned multifamily and single family property manager, feel free to reach out if you have any further questions.

Happy investing!!

Artfully,

Lorien

Property in OH, best way to set up llc/bank to keep track of expenses/taxes?

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