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Written by : Na Kauble
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are you currently in the process of trying to determine which state is best to form your llc for your real estate investments in today's video i am going to talk to you about the best state to form an llc for your real estate investment business so you probably clicked on this video because you're trying to determine which state is best to form an llc for your real estate business hi my name is andrew i'm an attorney here at malayalam where we help entrepreneurs just like you start your businesses without dealing with the complicated legal forms our done-for-you service is backed by over 2420 five-star google reviews and we can help you start your business too before i start talking about which state is best to form an llc for your real estate business please make sure you hit the like subscribe and bell notification so you don't miss out on any future videos taking those actions truly helps our channel grow so thank you in advance so let's go ahead and talk about the best state to form an llc for your real estate business there are real estate deals going up in the real estate market every single day some of those real estate properties some of those real estate deals may be in the state that you live in or they may be an estate that you don't live in before i answer the question which state is best to form an llc for a real estate business it's important to note that if you fail to form an llc in the correct state you may be liable for additional and extra expenses and fees fees that you could have avoided if you initially formed the llc in the correct state so which state should you form an llc for your real estate business the answer is the state that you live in the state where the real estate is located for example if you live in california but you purchase real estate property in florida then you're going to want to form a florida llc if you live in california and you purchase real estate in new york you're going to want to form a new york llc while it is true that you can form an llc in any state you have to keep in mind that if you decide to do that you must notify the proper authorities if you live in california but you purchase property in florida when you form that florida llc it is very important for you to take the additional step of doing a foreign qualification in california a foreign qualification basically means that you're notifying california that you have a business that's outside of the state making sure that all your expenses taxes are accounted for and the proper authorities are notified will ensure that you won't have to pay any sort of penalties or additional fees or expenses in the future now you may or may not have heard but there are states that have more favorable benefits to forming an llc for real estate property some individuals decide to form a wyoming llc because wyoming has some of the most favorable and some of the most strongest laws in regards to personal asset protection this means that it is quite difficult to pierce the corporate veil the corporate veil means the protection and the shield that llcs provide you and basically what that shield does is it protects you from personal liability the issue with forming an llc in a state where the real estate is not located is you will be responsible for additional fees that you could avoid allow me to give you an example say you live in california you purchase property in florida and you create an llc in wyoming in that case you will have contact with three separate states california because you live there florida because that's where your real estate is located and wyoming because that's where your llc is registered in that case you would be responsible for all three state fees you'll be responsible for california fees florida fees and wyoming fees in order to save on overhead costs the main answer to the question which state is best for me to form an llc for my real estate business the first answer is going to be the state that you live in if you live in california and you purchase property in california then it's best to form an llc in california the second answer is if you live in california but you purchase property in florida then it will be best for you to form an llc in the state of florida because that is where the real estate property is located but do keep in mind if you decide to go that route you must do a foreign qualification meaning you must notify the secretary of state that you have a company that is out of state taking the proper steps will ensure that you create a solid foundation for your business which will allow you to continue to grow it and to expand it without setting the correct foundation without taking the required steps you may find yourself initially succeeding and growing but then having to come back to fix what was not correctly set up so if you would like to learn more about which state is best to form an llc for your real estate business please make sure you click the link in the description box below to book your free call with a professional who can help you better understand which state is best to form an llc for your real estate business if you happen to enjoy this video please make sure you hit the like subscribe and bell notification so you don't miss out on any future videos it's time to invest in yourself it's time to rise if you would like to learn more about business llc's dbas startups sole proprietorships go ahead and watch one of these videos here you
Thanks for your comment Mauro Aresco, have a nice day.
- Na Kauble, Staff Member
hi Clint Kunz here and in this video I'm going to discuss the first LLC you should set up when you're looking to invest in real estate so with that let's get started alright guys when it comes to setting up limited liability companies there's a lot of information out there on the internet about setting up an LLC in your home state what type of LLC you should set up des Matta Delaware Wyoming you name it so I can see how it's can get confusing but here's what I want you to think about when you're going to create a business structure one of the first things that I always focus on is keeping my name off of title or off of that business unless I'm going to be out there actively promoting myself like Clint Coons com or you know Andersen business advisors where I want people to know that I'm associated with that business entity there is no reason why you should have your name tied to your limited liability company that is going to own rental real estate recently I was featured I didn't know this at the time on a segment on NPR where they were talking about privacy of limited liability companies and in this hour and a half long segment that they did discussing the fact that tenants cannot in certain circumstances find out who the owner of a limited liability company is that actually owns the property how troubling that is for these tenants who can't find this at find out this information now I didn't quite get the gist of the interview or the NPR program other than the fact to say that tenants need to know who the owners of the LLC is so that they can what harass them I mean if you have a legitimate claim you can always sue the LLC you don't need to know who actually owns it but they were making the point that yes we need to know who owns it and that people like myself they took one of my videos in an audio segment of it where I discuss using anonymity and they said these are the problems that prevent tenants from finding out who the true owners are because people can set up entities anonymously well guess what this is exactly why you should do it because you do not want tenants contacting you stepping into your life creating problems think on this let's say you have a tenant and they're disgruntled with you because you evicted them or you're about to a victim or maybe they want a new refrigerator and you're refusing to do it because they want the refrigerator with the icemaker you say you have a perfectly fine working refrigerator right now what could they do if they know about you have your personal information well simple they can get on the internet just trash your reputation what's to stop them nothing they can create multiple fake accounts start posting fake postings about you that other people will see your friends your business associates future tenants what could that do to your job you think you have me legal recourse against them no you could possibly get a temporary restraining order but that's gonna be expensive and time-consuming it may not be granted because you don't have proof that they're the ones actually doing it so it is for that reason when you're thinking about investing in real estate I strongly encourage you to create your structure so that people cannot discover who the actual owner is the way I go about doing this is I typically start with a Wyoming limited liability company that is gonna be the first LLC you set up and the reason why you're going to use Wyoming is because Wyoming does not list any information about the members or managers of that LLC now the Wyoming LLC should be used for residential real estate holdings all about to show you this in just a second if you're going to use if you're gonna be investing in commercial multifamily then I would go with Delaware and the reason why I look at these two structures is because with Delaware you're dealing with a different type of lender than you would be in Wyoming where you have single-family loans so there are different types of loans different types of lenders and so they look for different things when it comes to creating these structures so the way we set this up to protect your identity so someone cannot discover you if you first create your anonymity compliant we'll call it that an anonymity compliant LLC this can be in Wyoming it can be in Delaware let's just go with Wyoming here so I set up this Wyoming LLC that gives me complete anonymity so I'm the manager I'm the member of this LLC but no one knows that it's me because nothing's reported to the Secretary of State then when I go to create my let's say my Texas limited liability company up here here's the Texas LLC here's a Washington LLC right here then I'm gonna have these LLC's owned by this one Wyoming LLC so when you're creating them after you've set up this first base structure because this is gonna own all of your limited liability companies you don't need to do this one per once you have a whole bunch of Wyoming's just create one it will be the member in all of these the nation on the Texas Secretary of State's website will point to this company right here because that's what we're going to list when we file for our Texas LLC the name of our Wyoming LLC so if a tenant there in this Texas property right here they're disgruntled because you didn't buy in that new refrigerator they wanted that had the icemaker and the water dispenser in it and maybe the touchscreen so they decide well I'm gonna get back at you well who are they gonna get back at the limited liability company no they want to go you the owner to make your life uncomfortable so if they look up the LLC on the Texas Secretary of State's website it's gonna point them to Wyoming if they look up the Wyoming LLC it's gonna point them nowhere this is how you build out your real estate investing structure now this is on the residential side if it was a commercial property and I wanted to build the stuff out then this would be Delaware right here thought I'd be setting it up in so keep your business affairs private do not allow people to discover that you're the owner of these entities and a lot of times people say well Clint they're gonna know it's me because I'm managing the properties if you're self managing don't tell them you're the owner I mean one things often say is that if you're dealing with tenants yourself and you're self managing your properties and you're talking to them they're disgruntled about the owner well heck you can join them say you know what I think the owners a real sob myself I just manage the properties guy never responds to me so now you can kind of be one of them and they don't know that you own the property so they may look at you differently so this is how I go about creating structures I think it's very important the first entity you create in building out your limited liability company structure for real estate investing is going to start with an anonymity compliant LLC either in Wyoming or Delaware based upon the real estate you plan to invest in
Thanks Blaine your participation is very much appreciated
- Na Kauble
About the author
I've studied computational number theory at Yale University in New Haven and I am an expert in civil engineering. I usually feel hopeful. My previous job was sports physician (orthopedist) I held this position for 17 years, I love talking about philosophy and sand art. Huge fan of Henry Winkler I practice jai alai and collect breweriana.
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