Recommendations on LLC structure

I think Seth mentions in a couple videos to buy with an LLC then sell with a DBA of that LLC, or vice versa.

For those who use LLCs, do you have one for each state you buy/sell in? Or just in your home state... or both?

To clarify, my question is specifically related to land investing... thanks!

Hey @jamiemeyer - thanks for asking! As you can imagine, there's more than one way to skin a cat (even using an LLC at all is optional... just one of those suggested "best practices").

DISCLAIMER: I'm not an attorney, so none of this is legal advice. Talk to your own attorney to get legal advice on your specific situation.

When you start doing deals in multiple states, there's sort of a loosely defined threshold for when you're supposed to either register as a foreign corporation in the new state (using your existing LLC, in whatever state its registered) or form a new LLC in the state where you're working.

That's the trick though... it's not the most clear-cut set of rules. I've got an article that explains it further here: https://retipster.com/foreign-corporation

You have to think about things like:

  • Does your business entity have a physical presence in that state (e.g. – satellite offices)?
  • Do you ever travel to that state to conduct your business?
  • Will you have employees in that state or hire contractors or subcontractors to make significant improvements to the property?
  • Are you required to hold a business license in that state?
  • Are you buying and selling one property or several properties in that state per year?
  • How much of your company’s gross revenue is generated from that state?

Just speaking for myself, when I'm doing a single, one-off deal in another state and I don't plan to come back anytime soon, I don't spend much time wondering if I need to go through any formalities. I just do the deal and move on.

Alternatively, I could also use my self directed Roth IRA to own the property, or just own it in my personal name.

3 Likes

@jamiemeyer If you're just getting started remember to keep it simple. Don't fret the corporate structuring until you have something to structure for. A simple LLC for selling and a DBA for buying in your incorporating state of choice will take you quite far. That's my set up. I prefer to keep my buy and sell websites and personas independent from each other to avoid awkward conversations with sellers when they see what I'm selling for. Mailing consistently > any of that, though. Good luck!

2 Likes

@retipsterseth thanks, i'll check that out!

@Geoffrey Thanks for the advice and the reminder to keep it simple!

@Geoffrey amen to this!

I simply use my llc name for buying and selling. Many merchants will consider your dba your website url name.

Personally i have a small company logo on both buying and selling. No problems so far.

I also have a recording on my phone for press 1 to sell your property and press 2 to buy one of our properties.

@jawollbrink thanks for the feedback!

I have the same doubt. I am wondering whether it's better to have:
- the DBA as the selling website and the LLC as the buying website?
- or, is it better to have the DBA as the buying website and the LLC as the selling website?

I imagine if I wanna keep them separate, like Seth recommends, at some point the person dealing with the DBA will know the LLC.
So is it better if the buyer finds out there's a selling website or is better for the seller to know there's a buying website?

I have seperate domains but the same llc. Havent had a problem.

@fahim I think this is one of those things that can be easy to over-analyze, but either one can work. Whichever way you choose, at some point, someone will see your dba and find out that the LLC name is different. When this happens, if they even care (and they rarely do), just explain the situation - both names are referring to the same entity, and you use the dba for branding purposes.

With most issues in the real estate business, objections are pretty easy to overcome if you're able to clearly and confidently explain what's going on and why. If you're truly staying above-board and not trying to deceive people with malicious intent, any reasonable person won't take issue with it.

1 Like

@retipsterseth I see your point. Thanks, Seth!