All Forum Posts by: Matt Horwitz

@Stephen Artzerounian, the quick answer to #1 is no and no, and the quick answer to #2 is yes and yes. 

Whichever LLC is going to hold title to the property needs to be formed in the state where the property is located (since that's the jurisdiction in which its legally doing business). So, based on your comment, I imagine you'll have child LLCs in both PA and CT with a parent LLC in CT.

Before forming child LLCs, you'll need to form your parent LLC with you and your partners as members. If the parent company will be in CT, you'll list you and your partners' names in the Certificate of Organization as well as the Operating Agreement.

Then when you form a child LLC in PA, you'll just list the parent LLC in the Operating Agreement, since the PA Certificate of Organization does not ask for LLC member or manager information. Any one of you as individuals can be the Organizer, who is simply the person filing the LLC documents with the state (but is not automatically made a member). Then have the Organizer sign a 'Statement in Lieu of Organizational Meeting' appointing the parent LLC as member. That, along with your Operating Agreement, create you "ownership paper trail".

As long as you create each child LLC in the state where the property is located, you won't have to worry about foreign LLC registration.

Regarding legal issues with the parent: If the parent LLC is used strictly a holding company, you'll mitigate the risk of that entity being sued. You can create another CT management LLC, but some could state that it's overkill. Some might not. Hope that helps a bit.

Hi @Eric Crump, @Russell Brazil is correct, including in the District (which is its own jurisdiction). This is called foreign LLC registration or foreign LLC qualification.

You'll need Virginia's equivalent of the "Certificate of Good Standing" for your LLC. This is called the "Certificate of Fact of Existence" and you can obtain it online via VA's SCC eFile.

You'll then take that certificate and register your VA LLC in MD and/or DC. It's $100 in Maryland and $220 in DC. Additionally, you'll have to remain compliant in both of these jurisdictions by filing Annual Reports. By chance, both MD and DC are $300 per year. Hope that helps.

@Dave Sandford, I wouldn't worry about the order much... but if you're certain you're going to take property in the LLC, might want to get that going at least 1-2 months before you're ready to close on a property. The LLC approval shouldn't be long at all. Same states have a 1-3 day approval time. Slower states will be 2-4 weeks. The EIN approval process could take 4-6 weeks on the slow end.

@Charles Thurber, you're welcome. Yes, you're correct, but let me clarify and add some details. If you purchase a property in Ohio with an AZ LLC, your AZ LLC is illegally operating in OH and needs to register. This would be called a foreign LLC qualification. Alternatively, you could form an Ohio LLC. This would be a domestic LLC. A domestic LLC simply means formed in the same state where it's doing business. On the other hand, a foreign LLC is registered to do business in a state where it was not originally formed. It all comes down to legally doing business and having the proper state registrations in place. Hope that helps :)

@Charles Thurber, you should be forming the LLC(s) in the state where the property is located, since that is where you're legally doing business. But regardless, you can buy property in any state.

If you are registering your KY LLC in TN, then yes, there is certainly a fee. I've never heard of the term "initiation fee". In TN, it's called the filing fee. Take a look at the Certificate of Authority (the form for foreign LLC registration): https://sos.tn.gov/sites/default/files/forms/ss-4233.pdf. You can also file this online. I'm just including the form as all of the information is on "one page". As an additional note, you'd pay a filing fee if you were to register your KY LLC in any other state. 

@Rajiv Patel, sounds like a solid plan. I recommend LLC + insurance instead of LLC vs. insurance.

@Rajiv Patel, it's a good question. I think with CA LLCs, it's a balancing act. As @Janel Page mentions, managing a lot of LLCs can become time consuming. But I also see your goal of snatching up your first rental soon, so going the LLC route could be a valuable learning experience.

You're welcome @Rubin Thomas & @Deborah Burian !

@Mark S., whether you form the LLC in Tennessee (domestic) or register your Kentucky LLC in Tennessee (foreign), you still have to pay a $300 formation fee plus a $300 every year going forward.