Cost of forming an LLC..

[DeNiroONeal]

What is the average cost of forming a LLC with the idea of residential commercial real estate?

[BLL]

It depends if you want it done right or not. A good one will run a few hundred to a few thousand plus filing fees depening on your situation. You can get free or low cost operating agreements online, but many of them are worse than useless as they contain clauses that will actually hurt you if you get sued and are usually not state-specific.

To add a little perspective, I do know one attorney who charges at least $100,000 to set up an LLC. His client base is the $10M+ crowd who is looking for asset protection, tax minimization, and continity planning. He will also defend the LLC if the client is sued. The online LLC vendors do not and most local attorneys are ill-equipped to do so effectively.

[DeNiroONeal]

Well as a new investor I don't think I would be worth sueing yet; I'll just claim bankrupt and form another one..lol... but ya never know...I was looking at amerilawyer.com. and they have a package on their for $119 that claims to cover all the basics. Since this will be my first property I may grab this untill I can afford a better LLC. 

[BizTexts]

In MA its $500 to the State plus $20 fee.  A lawyer here will charge you around $1000, but you can do it yourself for just the state fees.

[BLL]

In MA its $500 to the State plus $20 fee.  A lawyer here will charge you around $1000, but you can do it yourself for just the state fees.

MA is great for LLCs from a creditor's perspective. You are required to put the physcial location of your business record into the public record. Use a PO box or private mail service for that address and you failed to maintain the corporate formalities, which makes it that much easier to pierce.

The $1,000 isn't for filing paperwork. It's for making sure the LLC addresses your specific issues. Cookie cutter, one size fits all packages can be worse than useless. I've seen some actually require the LLC to distribute funds to the member's creditors. If the attorney isn't sitting with you to discuss the LLC or has never defended one in court, you are wasting your time and he's stealing your money.

In MA, you are better off with a business trust. It has the same limited liability without the cost or required disclosures.

[BLL]

Well as a new investor I don't think I would be worth sueing yet; I'll just claim bankrupt and form another one..lol... but ya never know...I was looking at amerilawyer.com. and they have a package on their for $119 that claims to cover all the basics. Since this will be my first property I may grab this untill I can afford a better LLC. 

You are probably better off doing nothing until you have something worth protecting. The extra costs you'll put into the LLC will exceed the benefits, especially if you are actively managing the LLC. You also run the risk that any money you take out of the LLC will not be a dischargeable debt in bankruptcy. That means your ***ets will be liquidated and you will still owe money if the proceeds don't cover the cost. I doubt amerilawyer.com or any other low cost provider even knows about the issue, let alone can advise how to avoid it.

[DeNiroONeal]

So I guess this goes back to the original quesion of the recommended procedure of forming a LLC as a new investor. 
I know most banks or US Grants won't loan $ unless its an official business. Especially non-recourse loan requests. If I used my personal credit eventually I would have limit because of the natural debt-to-income ratio for loan approval calculations even with A+ credit.

[BLL]

The best way is to sit with a qualified planner that will evaluate your situation from a perspective that includes not only asset protection, but insurance, tax minimization, business continuity, retirement planning and estate planning. It isn't cheap, but it will be done right.

[DeNiroONeal]

$ounds good.. I have a rough draft  with some contingencies I wanted to include and then have a commercial real estate attorney review it so it won't be so expensive. Also I was thinking of using a main LLC as an umbrella for the other LLCs I have alloted for each property for liability purposes. As far as my goal, I plan to buy to hold, so this will all be long term..thanks for the advice and if you have more please post.

[BLL]

The multiple LLC solution only provides limited liability if there are different people running them and different owners. If you are doing everything, it's the same as if you owned everything in your own name.

[DeNiroONeal]

Yea, I just learned that thru my research...I''m thinking of some trust fund to protect my properties and assets..

[BLL]

Depending on your situation, a trust for the benefit of your children can work well. You maintain controll, keep your creditors at bay, and provide for your children. The trust owns the entities and you, as trustee, can appoint yourself as manager.