All Forum Posts by: Luke Eastman

Talk to an attorney about putting the properties in an LLC to see if that's the best option for you. The attorney should be capable of explaining the pros and cons of different options.

There's no rent control in Virginia, so you can raise as much as you want as long as it meets the terms of the lease. You can't increase rent on an existing lease. If their lease term expired, then they are automatically converted to a month-to-month lease and you can give them 30 days notice.

I recommend you study the market to determine an accurate rent rate. Talk to your tenants and see if they are interested in staying with a rent increase. Bump them up close to market rate, but consider keeping it 5-10% below market as an incentive for them staying. For example, if they are at $1,000 now and market rent is $1,600 then I would offer an increase to $1,500 as an incentive to stay. If they choose to leave, then I would give them no more than 60 days to vacate, clean the place up, and rent it for market rate. If they choose to stay, check their income to verify they can afford the new rent rate.

@Luke Eastman what's probably more important, is to speak with an estate planning attorney.

Your mother should probably have a Trust, to avoid the properties having to go through probate when she dies.

As part of the Trust, the estate planner may recommend an LLC or not.

 Luke, I am not an attorney. Take the below with a grain of salt.

When deciding whether to form an LLC in the state where your real estate property is located or in the state where you reside, several factors need to be considered:

1. State Laws and Requirements

• Local Laws: Real estate is generally governed by the laws of the state where the property is located. Having an LLC in that state may simplify compliance with local regulations, tax filings, and property management.
• State-Specific LLC Requirements: Each state has different requirements for forming and maintaining an LLC. Forming the LLC in the state where the property is located might be more straightforward, avoiding the need to register as a foreign LLC in that state.

2. Tax Implications

• State Taxes: If you form an LLC in your home state, but the property is in another state, you might have to file tax returns and pay taxes in both states. Forming the LLC in the state where the property is located may help avoid double taxation or the need for additional filings.
• Franchise Taxes and Fees: Some states have franchise taxes or annual fees for LLCs. These costs can vary significantly by state, so it's important to compare the financial impact of forming the LLC in either state.

3. Liability Protection

• Asset Protection: The primary reason for holding real estate in an LLC is to protect your personal assets from liability. Forming the LLC in the state where the property is located may offer clearer legal protections under that state's laws.
• Corporate Veil: Courts tend to respect the corporate veil (the legal distinction between the LLC and its owners) more when the LLC is properly formed and operated in the state where the property is located, reducing the risk of personal liability.

4. Operating Convenience

• Administration: Managing the LLC might be easier if it's formed in the state where you reside, especially if you plan to handle administrative tasks yourself. However, you would still need to register it as a foreign LLC in the state where the property is located, leading to additional paperwork and costs.

5. Foreign LLC Registration

• Dual State Requirements: If you form the LLC in your home state, you'll likely need to register it as a foreign LLC in the state where the property is located. This involves additional registration fees, annual reports, and possibly hiring a registered agent in the state where the property is located.

6. Privacy Considerations

• Anonymity: Some states allow LLC owners to maintain greater privacy by not requiring public disclosure of the members. If privacy is a concern, consider the state's rules on anonymity and how they align with your goals.

7. Professional Advice

• Consult with a Professional (both an attorney and an accountant)! I highly recommended you consult with a real estate attorney or tax professional who understands both states' laws. They can provide specific advice based on your situation, goals, and the nature of the property.

Sorry this post is a lot longer than I intended.