U.S. Company Registration for Real Estate Investors
Specifics of U.S. Company Registration for Real Estate Investment Purposes
Many international investors are looking into the U.S. real estate market as their next source of investment. This is due to the robust nature of that market, and reliable legal framework ensuring lower risk than in most developing markets.
MyUSACorporation.com specializes in helping foreign investors with proper registration of the legal entities needed to serve as holding companies for their real estate assets.
Choice of Legal Entity
Very important: it is a highly recommended and a common practice to register a unique legal entity for each individual real estate asset, in order to limit the liability of that particular property to itself and shield the investor and his/her other properties from any potential liability related to that property. We invite you to read our article on Limited Liability Protection to understand this very important issue in depth.
Foreigners can choose primarily between two types of entities: LLC and C-Corporation. LLC is the entity of choice when it comes to real estate and practically all real estate assets in America are held in LLCs. It is also the most common type of entity chosen by our foreign clients due to its simplicity, flexibility and single taxation. C-Corporation mostly chosen by young entrepreneurs looking to obtain Angel or VC financing.
It is however important to also know that an investor does not need to own those LLCs directly, and instead can opt for a holding schema where one company (possibly a C-Corporation, in a friendly state such as Wyoming or Delaware, for tax and other reasons), holds all LLCs that in turn hold the real estate assets. This structure also helps preserve anonymity (read more about that below).
You can see a comparison between LLC and C-Corporation here: LLC vs. Corporation.
Choice of State
As mentioned above, for real estate holding purposes an investor should opt for registering an LLC. Since we are talking about a physical cash-flowing asset the choice of state is limited to the state where the asset is located. So for example, to buy a condo in Miami, Florida, one must register a Florida LLC.
When looking to register a holding company that would be listed as the owner of all asset-holding LLCs it is recommended to form your company in one of the incorporation-friendly states, such as Delaware, Wyoming, or Nevada.
Majority of our clients choose either Delaware or Wyoming, due to more expensive fees in Nevada. You can see the comparison between those 3 states here: DE vs. NV vs. WY.
One important note on anonymity: both Wyoming and Delaware offer sufficient anonymity for corporation and LLCs to ensure the holding company cannot be easily traced to an individual owner. This way all LLCs in states that are less anonymous will have the owner listed as the anonymous Delaware or Wyoming company.
One more state is famous for its anonymity - New Mexico. However, keep in mind that only New Mexico LLCs are known to be anonymous entities, therefore when choosing New Mexico as the state of choice for a holding company make sure to opt for LLC, not corporation.
What Documents Are Needed?
First of all, to register a company in the U.S. you don't need to present any documents - only information. Documents would be necessary in case you want a US address or need to open a bank account, but not for company registration.
Do I Need To Be In The U.S. To Open My Company?
Not at all. All filings can be done remotely, with us serving as your proxy in the U.S. In almost all cases when we need a signature from our clients this can be done electronically.
Restrictions and Things to Consider
First of all, as a foreigner you are not required to have Social Security Number to open your company and obtain EIN (company tax ID). You also don’t need to have a U.S. address or phone number, however if you like to have U.S. address it’s possible to obtain them at our U.S. address solutions here).
Banking in the US is a more complicated topic. There are some companies on the internet that promise international clients help in opening a bank account remotely, but we warn our clients to be careful with those who claim they can help that way. To learn more about banking in the U.S., associated problems, and possible solutions specifically for real estate investment purposes please read our article "Opening a Bank Account for Real Estate Investment in U.S.".
Finally, international clients would need help filing their U.S. company taxes. We addressed this issue in our article U.S. Taxation for Foreign Real Estate Investors.
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We provide full service of forming your company, which includes everything from drafting and filing the Articles with the state for your choice, providing registered agent in any of the 50 state and DC, obtaining EIN for non-U.S. owners, drafting Operating Agreement, obtaining all necessary licenses and tax IDs, certifying your company documents for foreign use, and more.