How to Create an LLC to Buy a Second Home

Creating an LLC allows you to purchase an investment property that renters can enjoy while limiting your liability for any accidents there.
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A limited liability company operates as a legal entity separate from its owners. The LLC’s entity status means that it can own property such as a home. An advantage to owning an LLC is that it enjoys limited liability, like a corporation. If you and your significant other want to purchase a home as an investment property, creating an LLC will limit your liability for any accidents that might occur on the property.

Step 1

Navigate to the website for your state’s Secretary of State. Find the business registration section. Select a name for your LLC that differs from the name of any other LLC, corporation, limited partnership, other business organized within your state or any foreign company authorized to do business within the state. If the website allows you to search for other business names, conduct a business name search. If you do not find any other businesses with the name you have chosen, use this as the name of your LLC. The name must include the words “limited liability company,” “limited company” or an abbreviation of one of those phrases. If the website does not allow you to search business names, fill out a name reservation form and mail it to the Secretary of State's office. You will need to pay a small fee to reserve a name.

Step 2

Download or fill out online the forms to create the articles of organization. Include the name of the LLC and the address of the principal place of business. State that you are creating an LLC to buy a home as an investment property. Provide the name and address of the registered agent so that she can receive service of process in case the LLC gets sued. List any property, cash or other contributions made by the owners of the LLC. For example, if both you and your significant other contribute $50,000 to the LLC with which you will purchase the investment property, state that. Note whether the LLC has a right to admit more members or whether you and your significant other will be the only members of the LLC. Provide the names and addresses of the people who will manage the LLC. This could be you and your significant other, or you two could hire a manager. The articles may contain any other lawful provision that you wish to include.

Step 3

Mail the articles of organization to the Secretary of State’s office with the required filing fee. Some states may allow you to file the articles of organization online. The Secretary of State’s office will notify you when it files your articles of organization.

Step 4

Register your LLC with the Secretary of State each year and pay the required filing fee. Failure to register annually may result in the administrative dissolution of your LLC. At that point you will no longer enjoy limited liability for any accidents that might occur on your investment property; you can then be held personally liable.

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