Holidays, Good or Bad for Real Estate Business (LA 879)
Transcript:
Steven Butala: Steve and Jill here.
Jill DeWit: Hello.
Steven Butala: Welcome to the Land Academy show, entertaining land investment talk. I'm Steven Jack Butala.
Jill DeWit: I'm Jill DeWit broadcasting from sunny southern California.
Steven Butala: Today, Jill and I talk about, "Are the holidays good or bad for the real estate business?" I have to tell you, for 10 years, Jill and I have had a differing opinion on this, so this time we're going to actually go look back at the data ...
Jill DeWit: Okay.
Steven Butala: ... look back at what's happened and probably not settle it at all. Before we get into it, let's take a question posted by one of our members on LandInvestors.com online community, it's free.
Jill DeWit: Greg asks, "Hi, folks. Say I want to set up an LLC before I start. This has multiple reasons. I'm determined to get into this business ..."
Steven Butala: Excellent.
Jill DeWit: "... so being a non-resident, I really want to have my LLC in place first. One question for sure is," excuse me, "one question is for sure in which state to found." I'm sorry. I don't understand. "From what I've read so far," oh, what state to found your LLC, got it. "From what I've read so far, Arizona and Nevada are good ones, but why? I also read that you have to register for a foreign LLC for every state you're doing business with. Or, another recommendation I got was, just do an LLC in the state you want to work with. But if I'm targeting multiple states, does this mean that I have to found or register a foreign LLC in every state. Maybe someone can clarify this a little, since this for me has been a bit of a blocker. Thanks."
Steven Butala: I'll try to be ... this is not typically ... well, I'll try to answer these questions directly. The reason that you form an LLC is for legal reasons but there's tax implications too and then there's, let's call them, secrecy issues on top of it. Let's tackle them one by one. Number one, an LLC in any state is going to serve the legal function for you so that is to say if a real estate deal goes bad and the property's in the name of the LLC, the person who is upset about whatever on either side of the transaction sues the LLC, they don't sue you personally as the owner of the property. That's good and it doesn't matter what state that's in.
Number two, tax reasons. The tax implications of where you form an LLC generally don't matter. It's where you live that you have to file a state tax return and if you've got it structured the way that Jill and I do, it all rolls up into one anyway. So, where you live and where your offices are and all that, that's where you generally ... in general, these are all general ... don't take my word for it, this is just my opinion.
Then, the third reason is, and that's where this state to state to state issue consistently comes up is why ... can someone track me down if I own an LLC? If I own Large Land Business in Nevada, it's a lot harder to find the fact that Steve Butala owns that LLC in Nevada and in Delaware. There are state laws that govern who ... what's public information and what's not. In Arizona, it's a 10 second Google search to find out who owns what. Jill and I we don't hide. All of our LLCs are in Arizona, with exception of a couple so that's what this LLC business is all about. That's said, Jill's going to agree with me here, we've already spent too much time on this topic in my opinion. I don't mean to pick on the person that asked the question, just get one done.
If you are going to get into this business and it sounds like you are, you're going to have many, many LLCs. Jill and I file for them all the time.