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ABOUT CLINT COONS
Clint Coons, Esq. is one of the founding partners of Anderson Law Group, Clint has grown his legal and tax firm to over 400 employees by assisting real estate investors with creating and implementing solid entity structuring plans. His success in these regards is in large part due to his personal investing experience. A successful attorney, real estate investor, and speaker, Clint has used his innovative and dynamic strategies coupled with knowledge borne from experience to help thousands of people save millions of dollars and build real wealth.
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The information provided in this video should not be construed or relied on as legal advice for any specific fact or circumstance. Its content was prepared by Anderson Business Advisors with its main office at 3225 McLeod Drive Suite 100 Las Vegas, Nevada 89121. This video is designed for entertainment and information purposes only. Viewing this video does not create an attorney-client relationship with Anderson Business Advisors or any of its lawyers. You should not act or rely on any of the information contained herein without seeking professional legal advice.
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Are you interested in starting a rental real estate business but don’t know where to start? One of the first steps you need to take is to set up a Limited Liability Company (LLC). In this article, we will walk you through the process of setting up an LLC for rental real estate.
We sat down with Clint Coons, a licensed attorney and real estate investor with over 20 years of experience in the industry, to answer some frequently asked questions about LLCs.
What is an LLC?
An LLC is a type of business entity that provides both personal liability protection and tax flexibility. It is a hybrid structure that combines the benefits of a partnership or sole proprietorship with the liability protection of a corporation.
Why is an LLC important for rental real estate?
An LLC is important for rental real estate because it protects your personal assets from lawsuits or claims resulting from incidents that occur on your property. It provides a barrier between your personal and business assets and can help you avoid losing everything if a tenant sues you.
How do I set up an LLC for rental real estate?
To set up an LLC for rental real estate, follow these steps:
1. Choose a name: Your LLC name needs to be unique and not confused with an existing entity. Conduct a name search to ensure that your desired name is available.
2. File Articles of Organization: This legal document establishes the existence of your LLC with the state. It outlines the LLC’s name, location, registered agent, and member information.
3. Obtain an EIN: An EIN (Employer Identification Number) is a unique identifier for your LLC that you’ll need to do business. You can apply for an EIN through the IRS.
4. Draft an Operating Agreement: This document outlines the LLC’s internal operations, including how profits and expenses will be allocated, member duties, and voting rights.
5. Set up a Bank Account: Open a separate bank account for your LLC to keep business finances separate from personal finances.
What mistakes should I avoid when setting up an LLC?
Some mistakes to avoid when setting up an LLC include:
1. Not doing enough research on the state’s legal requirements for forming an LLC.
2. Not choosing the right name for your LLC. The name must not already be taken, and it cannot imply it’s part of a governmental agency.
3. Not having an Operating Agreement. Although some states do not require this, it’s an essential document that outlines the LLC’s internal operations and reduces disputes between members.
4. Not filing necessary paperwork with the state in a timely manner.
5. Not keeping accurate records of the LLC’s tax filings and financial transactions.
Conclusion
Setting up an LLC for rental real estate is a critical step in protecting your personal assets and establishing a professional business structure. By following these steps and avoiding common mistakes, you can create a successful LLC that helps you achieve your business goals. As Clint Coons advises, “Don’t let the fear of the unknown deter you from setting up an LLC. It’s a simple process that can save you tons of headaches down the road.”
This was great! Thanks Clint!
Good details
D
Thanks Clint! Great Info bro!
Extremely informative! Thank You for doing this.
Hello I have a Fl LLC but I sold my rental in 2021, I now live in SC, should I cancel my Fl LLC I do look at properties in Fl from time to time and it up for renewal until May 2023? But land trust sound better if we land another Fl rental. Thank you.
At 16:32 – In NC, it's possible to file LLC without personal individual name, only members (a WY LLC for example), but state requires annual report reveal natural persons name. Is there another way to stay anonymous in NC, without a nominee manager?
HI CLint. For wholesaling & flipping properties, is the best entity for that a S Corp? And if so, would the S Corp be connected with one's LLC? Thanks
Good Morning Clint, I am in the processing of purchasing my first investment property. I reside in FL, however, it is located in Kansas City, Mo. I didn't see that state mentioned so any advice on how to handle LLC/Land trust, other? Thank you in advance.
For partnerships tax returns of Wyoming LLC, and one person. Can the one owner person have another LLC, or living trust or land trust the second member? What are the choices for the 2nd member of Wyoming LLC to do partnership tax return? Thanks!
For partnership tax returns, you say need two tax payers, besides the owner can the other be a living trust or land trust for a child?
Excellent very substantive high value expertise. Thank you for sharing!
Please assume local LLC will be located in Wash DC.Wyoming will be holding LLC. Question is who should be manager of these? Thank you!
For risky real estate you advise LLC taxed as partnership, who can be manager of the LLC? Please do a YouTube on all the choices, such as c corp, another LLC? Individual, how to ideally set up a LLC in terms of ownership and management of LLC from risk perspective. Thank you!
Hi Clint, your videos are great! Thank you so much. My Dad has three rental houses on one legal property and I want him to start up LLC's for asset protection. Do you know if it's possible for him to set three LLC's up on the one lot of land or if the land would have to be subdivided first? One last question, two of the houses on the lot share septic. Do you know if this prevents them both from being able to become individual LLC's, even if we were to subdivide the land? We are in MD.
Thank you,
Matt
If the Wyoming LLC will serve as holding co for later local lox’s, is it better to have c corp as manager and living trusts as members?
I bought an apartment under an LLC to renovate it and do Airbnb. Now I have the possibility to rent it to a tenant instead. Would it be considered an investment or a business for tax purposes if I rent it to a tenant? I would love to take advantages of the start up cost and other business deductions
I have several properties in my name….I've created a Illinois llc. .Should I use a land trust and have the llc be the beneficiary or just put them under the llc or different llcs?…I have 5 properties
Would set up an LLC as a property holding company,property management company,what should the description of the llc be ?
Hey Clint! I bought a rental property before I found your video and learned about the holding LLC. I know have the structure set up (WY holding LLC and NC operating LLC for the rental). Do I do a warranty deed of the property to the NC LLC OR THE WY LLC?
Those the same apply when living in NYC ? Investing property’s in Pennsylvania do I open LLC in Wyoming to then open LLC in PA ? What will be ideal strategies setting up
Thank you for the informations. My questions are; when creating an EIN do I opt or the Wyoming holding company or the actual state that the rental is in or does it matter? Do I need an EIN in each LLC (holding company and state rental is in)? Thank you!
I have take care and liability money and save the project
Honor with thanks LLC working with me but I am agree but I have no money pay and only take care of sylhet Bangladesh
I need help setting up a llc I want to start real estate investing
Hi a follower here.
Can u get fimamcing on an anonimous based LLC? I guess the answer , is a strong no