All Forum Posts by: Matt Horwitz

Hey @Adam Widder, this one is hard to say. Some people accumulate dozens of properties and never form an LLC and others form an LLC right out of the gate. There is really no black and white rule. The S-Corp election (which can be made to an existing LLC) is best used when flipping in order to save money on self-employment tax. Also, a lot of people stress about the due on sale clause if they close in their personal name (with traditional funding) and then quitclaim deed the property to the LLC. Lenders will rarely know, let alone call the loan, especially if you make payments on time. I formed LLCs right away for various properties. It was also a little easier then to get commercial loans for the LLCs. Hope that helps!

Hi @Don Jackson, you're supposed to form the LLCs in the state's where the property is located since that is where you are legally doing business. You could also consider a holding company (say in WY) and that WY LLC owns each of the child LLCs in the various states.

Hey @Barry Cooley, is the property located in Alabama? An Alabama LLC will run you about $183 to setup. It breaks down as $100 to the state, $50-$65 to the probate judge (depends on the county you're in), and $28 for the required name reservation. After your LLC is approved, you'll get the the EIN from the IRS (free) and open the business checking account. Let me know if AL is the state where you're investing and I'll reply with more detailed steps. Hope that helps.

@Chris K., phenomenal points! I find it challenging at times to strike a balance between telling people what they want to hear (which usually involves over asset protection and complexity) vs. the common reality that simple is better to start out, unless, like you said, the parties involved are more sophisticated and experienced. Some people like to get fancy. But then again, sometimes all that over protection is what gets someone in the game... and hopefully they adjust and pivot as they progress.

@Kevin Daniel, what kind of questions do you have? I know the NY LLC filing process inside and out ;)

@Stephen Artzerounian, cool coincidence ;) And you're welcome!

Glad it's helpful @Charles Thurber! The parent LLC will just be one single domestic LLC registration. You shouldn't need to worry about registering it in any other states. If the parent LLC will just be a holding company, you can form it in any state really. At this point though, you'll need to get some legal advice to see if it's the best strategy and which state to register the parent LLC. You could form the parent LLC in whichever state you and your wife remain residents of. You could also consider WY and DE for the parent company. No clear black and white answer to this one though.

Sure thing @Dan Schwartz :) 

@Charles Thurber, regarding William's comment that you don't have to. Let me add some clarification. Nothing can really stop you, but that non-registered LLC will be illegally transacting business in the state and is subject to fines and violations by both the Secretary of State and the revenue body. Now, the "LLC police" aren't watching over your every move, so at times, the ability to bring suit can be a stronger case. However, you're supposed to register each entity where it is doing business. Whether that is a domestic LLC registration or a foreign LLC registration. I recommend a proper setup from the start.

Regarding 'how many properties per LLC', this one is gray and you'll see answers all across the spectrum. You can always start out with multiple LLCs and then change your position as time goes on. I just say that because that was the tone of your question... that you were leaning that way. A small benefit is separate bank accounts for property... although some people consider that a hassle, and therefore a disadvantage.

You may also want to consider a parent LLC (holding company) that owns the child LLCs. Each child LLC is registered/formed in the state where the real estate is located.

@Taylor Brugna is 100% correct on both his replies. LLC taxed as Partnership is likely where you should start.

@Dan Schwartz, a Qualified Joint Venture can only be used in a community property state (AZ, CA, ID, LA, NV, NM, TX, WA, and WI). A QJV is not available for a husband-wife Oklahoma LLC.