Embarking on the journey of real estate investment holds the promise of financial freedom and wealth accumulation. However, navigating the complexities of property ownership and business conduct requires a strategic approach. One powerful tool that savvy investors often leverage is the Limited Liability Company (LLC). By establishing an LLC for their real estate ventures, investors can unlock a host of benefits, including asset protection, tax advantages, and operational flexibility. If you want to dive deeper into why using an LLC is recommended, make sure to check out the dedicated blog post that gives you an overview of all the benefits!
In this comprehensive guide, we'll walk you through the essential steps to set up an LLC for real estate investing. From understanding the basics of LLC formation to navigating legal requirements and optimizing your investment structure, we'll provide you with the knowledge and insights needed to embark on this empowering journey with confidence. Whether you're a seasoned investor looking to enhance your asset protection strategy or a newcomer eager to embark on your first real estate venture, this guide will equip you with the tools and resources necessary to establish a solid foundation for success. Let's dive in and explore the steps to unlock the full potential of your real estate investments through the establishment of an LLC.
Set Up Your LLC on Your Own
The process of how to set up an LLC requires several relatively straightforward steps, though keep in mind that the paperwork process is more of a challenge for non-US residents. Here are the steps to get an LLC set up:
Choose a name for your LLC – This name should reflect your real estate business and comply with your government rules. The name must be unique and distinguishable from other existing business names in your state. The name must also include the words "Limited Liability Company" or an abbreviation such as "LLC" or "L.L.C." You can check the availability of your desired name by searching on your state's secretary of state website or using a name search tool.
File articles of organization with your state – The articles of organization are the official documents that create your LLC and register it with the state. These typically include basic information about your LLC, such as its name, address, purpose, duration, registered agent, and members. The filing fee for the articles of organization varies by state, with some states charging up to $500.
Create an operating agreement for your LLC – This legal document outlines the rules and procedures for running your LLC. The operating agreement covers important aspects of your LLC, such as the roles and responsibilities of the members, the voting and decision-making process, the allocation of profits and losses, the distribution of dividends, the admission and withdrawal of members, the dissolution and liquidation of the LLC and the resolution of disputes. It is strongly recommended that you hire a lawyer for this process. The operating agreement is not required to be filed with the state, but it is essential to have one to avoid potential conflicts and misunderstandings among the members.
Obtain an employer identification number (EIN) from the IRS – Also called a Tax ID number, a unique nine-digit number that identifies your LLC for tax purposes. You can apply for an EIN for free by mail or by fax. You will need an EIN to open a bank account, file tax returns, hire employees for your LLC, and comply with other federal and state tax obligations.
Open a bank account for your LLC – Having a bank account for your LLC is important to keep your personal and business finances separate, which helps you maintain your limited liability protection and simplify your accounting and bookkeeping. To open a bank account for your LLC, you will need your EIN, your articles of organization, your operating agreement, and other documents required by the bank you select.
Buy or transfer real estate properties to your LLC – If you are buying new properties for your LLC, you can simply use the name of the LLC as the buyer on the purchase contract and the property deed. If you already own properties in your own name and want to transfer them to your LLC, you will need to execute a quitclaim deed or a warranty deed that transfers the title from you to the LLC. You may also need to notify your lender, insurer, and tenants about the change of ownership.
Take the Right Steps with Waltz
We understand that setting up an LLC involves a fair share of paperwork despite being straightforward. Waltz has already taken care of the LLC registration process for you - within less than 20 minutes, you’ll get an LLC of your own to invest in US property, which includes an operating agreement and EIN. You’ll get all the tax and personal protection advantages you’ve just read about above. By streamlining heavy manual processes into one digital platform, Waltz makes investing in US real estate as easy, quick and accessible as possible. Contact our team today to learn more about our services and any LLC real estate investment question you may have!
