Registered Agent for new LLC

[Ianster]

Hi All,

I am about to form a new LLC for buying my first property. Is it a good idea to spefify the registered agent as someone besides myself? Several incorporation web sites offer to do it for $100+ per year. However, I am looking to save money and would like to do it all myself.

Does it provide less legal protection somehow if I am the registered agent?

Thanks for any tips,
Ian

[optionfl]

here you go. http://newjersey.gov/ and search llc.

good luck

[Ianster]

Thanks for the reply, but I already know the steps for forming the LLC. What I am looking for is advice from a real-estate investment standpoint. I am wondering whether the protection afforded me by an LLC is enough, or if it is also important to hide my identity by using a separate agent.

Thanks,
Ian

[Burke]

Ian,

Before reading my post, I feel obligated to post a disclaimer. I am not an attorney nor do I act as one on TV. :smiley21: And, I have not yet completed my first deal.

With that said, here is a paste of a message from another forum I monitor. This was posted just yesterday in response to a thread started several weeks ago by someone with similar questions. I think it is definitely thought provoking. If you would like to read the whole thread, it is at http://www.websitetoolbox.com/tool/post/sdcia/vpost?id=624644

Hope you find it insteresting as well.

Burke


Pasted Message follows.
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For those still interested in this topic, I have some new info to add...

I finally got around to purchasing my 1 million dollar umbrella policy today from Farmers. The base premium was $253, there was an additional charge of $34 for my RV because it was a 3rd vehicle, and $15 dollars extra for each of my ten rentals. The total bill for my house, three vehicles, an all 10 rentals was $437.



So for an additional $437, I get total of $1.3 million of coverage on each rental property (with the fringe benefit of having all of my cars and personal residence liability bumped up to 1.3 million as well!).



******************************************



I think it is important to note that each additional rental I buy will cost me $15 to also get the 1.3 million in liability coverage on that house.



$15. For $1.3 million in coverage.



Not only is this interesting in itself, I think it is important to note this in the larger context of risk. Insurance companies are in business to make money. The only way that they can possibly do this is to have VERY accurate assessments of risk. What do you think their assessment of risk is for a landlord who owns rental property!?



If they are planning to MAKE MONEY on a $15 a year policy, they must be estimating risk at near zero! I mean, there must be some administrative costs, even STAMPS cost for billing...If they EVER, even once, had to pay a 1.3 million claim on a $15 policy, they would lose ALL of their profits for decades! They must be AWFULLY confident that they will never have to pay anything...



This is deeply reassuring to me...

[Ianster]

Thanks, Burke. That answers a lot of questions. I had not even considered the role of insurance.

So it seems that the answer is... there is no single answer. I guess a combination of the right insurance and LLC is a good idea.

Now I have to simply decide how important it is for me to not be listed as the registered agent...

Cheers,
Ian

[mike_mn]

When using an LLC for holding property, the easiest way it to make it a 1 person LLC with you as the registerd agent. Also, make sure you organize as a disregarded entity. This makes the LLC work like it is just you without the LLC for taxes. When doing your tax return, you do a schedule e and put the name of the llc that owns the property. No other forms needed.

If your concern is keeping your name off the public records, you need to use a land trust to do that. No liability protection there, just anonimity, which in itself can cause some layer of protection.

A couple things to remember about LLCs. Your landlord insurance policy will cost you about double or more, because you now enter the relm of commercial insurance, insuring the company assets, not yours. If you choose to keep the insurance poilcy in your own name and you have a claim, there is a good chance the insurance company wont pay, since you are not in title of the property.

My guess is, the reason you want an LLC is to limit your liability. FYI, If you do not keep proper records, operating agreements, separate bank accounts(no embezzelment of company funds, they must be distributed properly), corporate records and minutes of annual meetings(with yourself)yada,yada,yada...You may find yourself in a position that the company will not limit your liability. Also, the company wont protect you from things you do wrong. For example, if you choose to have sex with your tenant in lieu of rent, you might very well go to jail. No protection there. If you change the locks on the door, without proper authority to do so, you may be liable, no protection from the LLC.

Unless you own an apartment building >12 units, I would stick with an umbrella insurance policy. A personal umbrella policy wont cover LLCs. They need there own umbrella policy. So, to keep it simple, if you want to get your name off the public records, put your property in a land trust(with someone you trust as the trustee) and you as the benificiary. Get an umbrella policy for 1MM covering everything you own. That means, if you get into a car accident, and they go after everything you own, you have 1MM coverage before they come after your own assets. You can add trusts that you have benificial interest in to the umbrella policys too.

[SlumLordMike]

My Farmers agent has previously told me what Wolmic said in his final paragraph. Good post. The umbrella is a good thing for the money.

[optionfl]

now, since you want privacy and protection, then you could use a land trust or revocable living trust, and llc as a beneficiary to your trust.

good luck