Creating a Rental Property LLC in Oregon

Benefits of creating a rental property LLC in Oregon

Liability Protection

An LLC offers limitations on liability like you would find in a corporation but in a simpler and more flexible entity. Limited liability means that, in most cases, the LLC is responsible for the debts and liabilities of the company, not the owner.

Pass-through Taxation

One area where there is typically not a separation between an LLC and its owners is taxes. A corporation is usually taxed separately from its owners. But when the corporation pays the owners a dividend, they may also be taxed. Consequently, the income from corporations could be subject to double taxation. This is usually not the case for an LLC. With an LLC, income is passed directly to the owners. This will likely prevent double taxation issues.

Separation of business and personal assets

An overlooked benefit of an LLC is the ability to separate business and personal assets. You should be able to put assets such as real estate directly into your LLC. This can help protect both your business and personal assets. It can also help keep things cleaner when there are multiple owners of an LLC.

Series LLCs for real estate investors in Oregon

Series LLCs allow owners to create multiple subsidiaries with a more streamlined formation process. This can be beneficial for real estate investors as owners may be able to spread their rental properties among different entities. You cannot form a series LLC in Oregon at this time.

What to know before creating a rental property LLC in Oregon

A rental property LLC in Oregon can have a number of benefits when compared to other entities. Some of the key benefits of an Oregon LLC include limited liability, streamlined tax planning, and the ability to separate your business and personal assets.

How to form an LLC for your Oregon rental property

It’s a breeze to form your LLC with our LLC Formation Service. The normal formation process typically includes the following:

Step 1: Form Your LLC

1. Name your Oregon LLC
2. Appoint a Registered Agent
3. Create an Operating Agreement
4. File the Articles of Organization
5. Apply for an EIN

As mentioned earlier, you may need to take a few extra steps if you already own some rental properties.

Step 2: Transfer Ownership of the Property to the LLC

You will likely need to transfer the deeds of any existing properties to your new LLC. You should be able to do this by filing a new deed in the county recorder’s office. This deed will likely need to be filed in the same county where the property is located. You may need to pay a recording fee when you file the deed.

Step 3: Inform the Lender

You will probably need to inform the lender if there is a deed or mortgage on your property. Changing the ownership of the LLC could require some changes to the loan paperwork. The rate or terms of the note may also change after the transfer.

Step 4: Inform Tenants

It’s usually a good idea to notify any tenants of an ownership change.  You may also need to amend any leases or rental agreements for the property. It may still be a good idea to amend your forms, even if you don’t currently have any tenants.

Who should form an Oregon LLC for their rental property?

Anyone who invests in a rental property may be able to benefit from an LLC. Whether you have yet to purchase your first investment property or you already have several, an LLC could help your business.

Should you form your Oregon LLC first?

You may want to form an LLC before you purchase your first property, but it’s okay if you have not. When your form the LLC first, you should be able to buy properties directly in the name of the LLC. If you have existing properties, however, then you might need to take a few additional steps.

How We Can Help

You don’t need to sweat the small stuff when forming your new LLC. Our Formation Services can take the guesswork out of forming your company. Once you’re up and running, we also have several other valuable services for your LLC. If you’re looking to qualify for a loan or land some additional real estate investors, check out our Business Plan services. We also offer Worry-Free Compliance Services to help you keep your LLC on the right path legally.