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Forming LLC for Investment Properties

Asked by: Brian - 24 August, 2011
https://d25eic0jctudgb.cloudfront.net/images/site/avatars/default.png-f1597c1da25f30f8c1a941405e8391c8 Hi,

I'm looking at buidling a portfolio of rental properties in other states and looking at creating an LLC in Wyoming. What would you suggest is the best approach and also is there companies that will file all property paperwork for each state? Also, is it better to create an LLC for each property in order to protect other properties? 

Thanks
Answered by: Robert Kowalski - 29 August, 2011
https://d25eic0jctudgb.cloudfront.net/images/site/avatars/35.jpg-687fc92d5f6c5febcbdccb6895b08b8c Dear Brian,

First of all in is highly recommended to place each investment property in its own LLC. Not only that you protect all other properties from anything that could happen with this property, you also make it is easier for yourself to sell your investment property - you just sell the LLC itself with the property "inside".

Another important thing to understand - each of your investment properties would need to be held in an LLC that is registered in the state where this property is physically located. That means if you plan to buy an investment property in Florida this property should be held in a Florida LLC. You can only hold a property in an LLC from another state if this property is not used to produce revenue (meaning if you don't rent it and don't sell it). To understand this point better please see our answer to "Owning Rel Estate in California with Wyoming LLC".

So to conclude, you could register your holding company in Wyoming (as an example) and then create LLCs for each property in the state where this property is located, owned by the Wyoming LLC. Alternatively you can simply own those LLCs directly. However, if you want to hold the properties in the Wyoming LLC directly you would need to register that LLC a Foreign Entity in the state where the property is located, which to me sounds pretty redundant.

Our company can help you form your LLCs in any state, please visit our LLC Formation page.

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