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New Investor
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Real Estate and LLC's
Friday, February 01 2008 09:10 PM
Ok, I have a question. I'm setting my business using two LLC. Right now I have one LLC that will be used a the property management company and I'm looking to set up other LLC in another state to own and hold the propery thorugh a Land Trust.
The question is do I set it up as a foreign LLC or just file to get a new Domestic LLC formed.
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Randy Hughes
Master Advisor-39 years of experience
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Re:Real Estate and LLC's
Saturday, February 02 2008 09:00 AM
Dear New Investor,
SEE MY COMMENTS IN BOLD BELOW.
Ok, I have a question. I'm setting my business using two LLC. Right now I have one LLC that will be used a the property management company and I'm looking to set up other LLC in another state to own and hold the propery thorugh a Land Trust.
The question is do I set it up as a foreign LLC or just file to get a new Domestic LLC formed.
THIS IS A QUESTION OFTEN ASKED BUT MOST MISUNDERSTOOD. MOST ALL "ADVISORS" WILL TELL YOU THAT YOU MUST REGISTER THE 2ND LLC IN YOUR STATE. I DISAGREE. MY LOGIC IS THAT IF THE LLC IS THE BENEFICIARY OF A LAND TRUST...IT IS NOT "DOING BUSINESS" IN YOUR STATE AND THEREFORE DOES NOT HAVE TO REGISTER. THE LLC IS MERELY AN "INVESTOR" IN THE LAND TRUST AND THE LAND TRUST HOLDS TITLE TO THE PROPERTY. LAND TRUSTS DO NOT HAVE TO REGISTER EITHER.
FURTHERMORE, FROM YOUR VIEWPOINT THE ONLY REASON THAT YOU MIGHT WANT TO REGISTER YOUR LLC IS IF YOUR LLC WERE TO SUE SOMEONE OR SOMETHING IN YOUR STATE...THEN, IT MUST BE REGISTERED TO FILE A LAWSUIT.
HOPE THIS HELPS,
Randy Hughes
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New Investor
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Re:Re:Real Estate and LLC's
Monday, February 04 2008 04:32 PM
Ok, maybe I'm not understand completely. OK I have my property management company set up as a register LLC. The tenants pay all of there rent to the property management company. I was thinking the best way to hold the property was with a Land Trust with the beneficiary as other LLC I will call that the holding company. Can you explain, if I dont register the holding company as a LLC I wouldn't have the protection that a LLC provides right. Let's say we are suited by a tenant, what protection will I have if the LLC is not register????????
Thanks
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Randy Hughes
Master Advisor-39 years of experience
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Re:Re:Re:Real Estate and LLC's
Monday, February 04 2008 05:20 PM
Registering your LLC has nothing to do with the legality of it and how it protects you. Registeration is for state taxing authorities to find you and try to find a way to tax you.
Randy Hughes
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New Investor
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Re:Re:Re:Re:Real Estate and LLC's
Monday, February 04 2008 06:07 PM
Randy,
I was think that a LLC wasn't legal until I registered it with the State. Can you tell me how I can set this up properly or just give me a idea. Like I said I already have one LLC that I'm using for the property Management company that is registered. What are my next steps to having the other LLC to hold the property??????????
Thanks
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Randy Hughes
Master Advisor-39 years of experience
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Re:Re:Re:Re:Re:Real Estate and LLC's
Tuesday, February 05 2008 02:45 PM
SEE MY COMMENTS IN BOLD BELOW.
I was thinking that a LLC wasn't legal until I registered it with the State. THIS IS WRONG.
Can you tell me how I can set this up properly or just give me a idea. Like I said I already have one LLC that I'm using for the property Management company that is registered. What are my next steps to having the other LLC to hold the property??????????
THE STEPS ARE: YOU DEED THE PROPERTY FROM WHERE EVER IT IS TITLED NOW TO AN INDIVIDUAL LAND TRUST. THEN, YOU MAKE THE LLC THE BENEFICIARY OF THE LAND TRUST.
Randy Hughes
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Wallace
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Re:Re:Re:Re:Re:Real Estate and LLC's
Sunday, January 10 2010 09:34 PM
Hi New Investor,
Perhaps I can add my 2 cents into this. I formed a few LLCs last year for my real estate investments. Randy is right about the legality of the LLC. There's no legal requirement to register. Forming an LLC provides separation from you vs. the real estate investments. Registering the LLC in the state that it is domiciled is a formality (not really required), but highly recommended. You need to register to make use of the local court system. Whether you sue someone or are being sued, if you do not register in the state that the property is domiciled, you have no legal authority or recourse. If you cannot use the local court system and you end up getting sued, you're pretty much screwed. However, you have to think about the separation that the LLC provides. If you were to be sued personally/civil suit. ex: you hit someone with your car. The LLC will provide separation from you and your real estate. In this instance, you probably don't need to register in the domiciled state. That's called an external attack. If a tenant slips and falls and sues you (or you find a reason to sue your tenant), that's when you need to use the local court system and that's when registering your property (aka foreign filing) is important. That's known as an internal attack. I'm not a lawyer, so if there are lawyers reading this, correct me if I'm wrong.
As for myself, I have property in FL, TX, LA, CA, OR, MS. I have my LLC in Nevada (because NV has superior partnership laws i.e. "sole remedy non-liquidating charging order). I live in CA. Originally, I was going to deed title into my NV LLC, but after studying Land Trusts with Hughs, the better solution is to form a trust and make this LLC beneficiary. I also have another LLC in NV that provide equity stripping.
Hope this helps!
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