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Apr
16
How to Create an LLC for Investing in Real Estate in Florida

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Author bio: Jack Bernstein is a personal injury lawyer in Tampa with over 36 years of experience.

The Florida real estate market is booming. With so much to offer from the best beaches in the world to the best entertainment for singles, families, and retirees alike, it’s no wonder that the Florida real estate market is hot. Individuals who are looking to get in on the action should consider the best ways to go about investing in real estate in the Sunshine State.

Real Estate Investment LLCs

Many real estate investors are turning to LLCs to manage their real estate investments. An LLC is an important way to manage your real estate investments and limit your potential liability for unforeseen events. Here’s how to create an LLC for investing in real estate in Florida.

How Do I Create an LLC for Florida Real Estate Investments?

To create an LLC for Florida real estate investments, you follow the required steps to form an LLC. Your LLC should include all of the required information to establish a functional LLC including choosing a name and establishing the registered agent. You should also create an operating agreement that defines your rights and duties as a member, and maybe the only member, of the LLC.

Steps to Create a Real Estate Investing LLC in Florida:

  1. Name your LLC

Your LLC needs a name. The name must be unique. It can’t be too much like any business that’s already registered in Florida.

  1. File the Articles of Organization for your LLC

Articles of Organization place the most essential information about the LLC on file and the public record. You must list the name of your LLC, the street address, and the mailing address. You must have a registered agent. The Articles of Organization must list each person that’s authorized to manage the LLC. Articles of Organization sound complicated, but they aren’t really. You simply provide the required information.

  1. Pay the filing fee

The current filing fee for an LLC in Florida is $125. The cost includes a filing fee and a registered agent fee. If you need copies or a certified copy of your status, there are additional fees to pay to get these documents.

  1. Create an operating agreement

An operating agreement is not required for a Florida real estate LLC. You don’t need to create an operating agreement or file it to have a valid LLC in Florida. However, having an operating agreement for your real estate LLC is a good idea.

Without the agreement, it’s easier for third parties to cross your operating agreement in an attempt to hold you personally liable for the losses of the LLC. The operating agreement details the structure of the LLC along with the rights, duties, and management for the business entity.

  1. Get an Employer Identification Number if you need one

If you have employees or if you want to be taxed as a corporation, you need an Employer Identification Number or an EIN. You may apply for an EIN through the Internal Revenue Service (IRS). IRS agents review your submission and immediately issue your EIN.

  1. Register with the Department of Revenue if it’s required for you

If your LLC sells any goods or services or even collects sales tax, you must register with the Florida Department of Revenue. To register, you complete form DR-1 Business Tax Application. You must provide demographic information as well as answer questions about the activities of the LLC.

  1. Get the business licenses that you need

Generally, you don’t need a license to invest in real estate in Florida. You need a license to be a real estate agent, but real estate investing isn’t the same thing. Even though the answer is probably no for real estate investing, it’s important to think through whether any kind of business license is required for your LLC.

  1. File your annual report

Once your real estate investing LLC is up and running, you must file the annual report. You confirm the information that you filed in your Articles of Organization. There’s an annual filing fee of $138.75 and a hefty penalty of $400 if your filing is late.

  1. What Is a Single-Member LLC in Florida?

A single-member LLC is an LLC with only one member. You might see it by the shorthand SMLLC. An SMLCC, or single-member LLC, is a lot like any LLC in Florida with the distinction that an LLC has only one member. With only one member, you establish the operating rules for the LLC, but it’s still a formal corporate structure that protects you in the event of losing investments, legal liability or other financial liabilities.

  1. Why Do I Need an LLC for Real Estate Investing If I'm Going to Be the Only Member?

Even if you’re going to be the only member of your LLC, it’s still important to create an LLC to limit your financial liability. Without the LLC, you might be personally liable if there’s an unexpected issue with your real estate investments. Having a corporate structure allows you to invest without risking your personal assets. An LLC is a risk-management tool that protects your personal net worth while allowing you to participate in real estate investments.

  1. Create an LLC for Each Property You Manage

When you invest in real estate, it’s a good idea to make a separate LLC for each property you manage. A separate entity limits your legal liability to just the property involved. For example, if you have three properties, and there’s an accident at one of the properties, the victim can’t collect from the other two properties to satisfy a judgment.

Instead, your other assets are protected. If all three investments are in one entity, an accident victim may try to seize your other properties to collect a judgment. Creating a separate LLC for each property is almost always a good idea. There may be exceptions where a victim could look to other assets, but in most cases, creating multiple LLCs protects your interests by segregating them legally.

  1. Investigate the Laws That Apply to Your Investment Activities

Before you begin your real estate investing, it’s vital to ensure that the activity you want to pursue is legal in the location where you’re hoping to invest. For example, short-term rentals including Airbnb are more popular than ever before, but they’re also more regulated than ever before.

You may need to get a license to operate a short-term rental, and it’s important to ensure that short-term rentals are legal for the property that you hope to use. Investigating the laws for your type of planned real estate investment can save you hassles as you begin your Florida real estate investment LLC.


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