Hi BP Community, First post - feels like I have been listening to the podcast and reading the forum for an eternity!
I am hoping someone could give me some guidance on forming a LLC. I am about to close on a multifamily in Washington DC (Yay!). Its for investment purposes, I am going to be renovating, holding and renting. I have homeowners & an umbrella policy lined up. I currently live in Northern Virginia and will be out of the country by the end of the year (US State department, so paying VA State taxes whilst out of the country).
Advice on whether to setup the LLC in DC, VA or Delaware? If formed in VA but the property is in in DC will this mean more paper work / expense?
Sorry for the newbie question and thanks in advance for any info.
I am in about the same place as you - just closing on a small unit in DC, living in Northern Virginia (and funny enough also from an FSO family! You have to get a license to rent in DC. It's pretty straightforward and you can do it all online at https://dcra.dc.gov/service/residential-housing-re....
I formed an LLC for a separate business inside DC and found it equally simple to do from the DCRA website. I thought about doing it in Delaware but figured it would be easier to keep everything straight if I did it in DC. However, I think you have to have an agent registered in DC to receive any LLC related mail if you do it that way.
Who did you use for your homeowner's and umbrella policy?
I am in about the same place as you - just closing on a small unit in DC, living in Northern Virginia (and funny enough also from an FSO family! You have to get a license to rent in DC. It's pretty straightforward and you can do it all online at https://dcra.dc.gov/service/residential-housing-re....
I formed an LLC for a separate business inside DC and found it equally simple to do from the DCRA website. I thought about doing it in Delaware but figured it would be easier to keep everything straight if I did it in DC. However, I think you have to have an agent registered in DC to receive any LLC related mail if you do it that way.
Who did you use for your homeowner's and umbrella policy?
More paperwork and tax situation will be more complex if you form the LLC in VA or Delaware, but then collect revenue from a source within the District, as it would be considered a "foreign entity" which also needs to be registered with the city. It will also be more expensive from an operational perspective in terms of filing and ongoing maintenance fees for the entity.
I was in the same boat last year trying to decide where to set the entity up, and i ultimately concluded keeping it in DC would be the best option. Feel free to PM me if you'd like further details. Aside from entity incorporation there are a lot of other hoops to jump through regarding licensing and properly registering your property in DC you should make sure you understand.
FYI - got a bit more information from my real estate agent. In DC, as part of the business license for renting, you have to get your unit inspected by DCRA. It takes a bit of time, but the way she described it to me it's not that complicated. She recommended an expedited service for the license if I want to get it quickly. As a newbie on the site, I don't know if it's kosher to post company recommendations openly, but I will gladly share the info if you like. It might work for you if you're heading overseas again.
@Paul Nicklin@Michael Garofalo@Anne Russell thanks for sharing your questions and advice about buying in DC. I'm also in a similar position (based in NOVA, buying in DC), so this thread is very helpful. Will PM you directly for further details.
@Paul Nicklin, when buyer purchases a home via Guidance, Guidance automatically creates a LLC and charges buyer every month LLC fee. I think LLC fee is about $15-$20. Both Guidance and Buyer are partner of this new LLC. LLC creation is build-in Guidance's Loan-process.