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December 20, 2023 | read

Why Most Real Estate Investors Don’t Need To Pay For A Registered Agent

Scott Smith

Using an LLC to invest in real estate is becoming increasingly popular. LLCs can create a buffer between you and your asset. In other words, if one of your tenants sues you for some reason to do with the property, there’s a layer of insulation between yourself and your personal assets and the property you’re being sued over. In addition, there are tax benefits to holding real estate in an LLC and it adds a layer of privacy between yourself and your property.

The question here is whether or not you should retain the services of a registered agent.

Generally speaking, when the LLC is being established, you can have a lawyer act as the registered agent during its formation. Afterward, is it worth the cost of retaining a registered agent for your LLC?

Real Estate Investors Can be Their Own Registered Agent

First, let’s talk about what a registered agent does. Registered agents essentially inform you when someone has filed a lawsuit against you, keep you updated about important deadlines, and most importantly, it’s their name and address that’s included in the LLC’s records.

In addition, registered agents are necessary when you own property in a state that you do not have a physical address in. Registered agents will be responsible for accepting important correspondence from the Secretary of State and other entities or individuals.

Otherwise, you can perform this service for yourself. If you’re a real estate investor, it could end up saving you money.

Real Estate Investors Often Don’t Need a Certified Registered Agent

If you’re a real estate investor who has created an LLC for the purpose of buying property, restoring it, and then flipping it, then you’re generally managing these properties in your home state. In other words, most real estate investors who invest this way, aren’t buying up properties in other states and then flipping them. If they are, then they would likely need to invest in a registered agent to manage their correspondence from Uncle Sam.

In other words, these are:

  • Businesses with a physical location in the state that they own property
  • Businesses that only operate in their home state
  • Businesses that aren’t terribly concerned about their privacy

Some Real Estate Investors Find the Expenditure Worthwhile

If you’re a real estate investor who has created an LLC for the purpose of holding property and renting it, then it may be worthwhile to consider a registered agent. If you’re LLC does not have a physical location within the state, and therefore no physical address at which to receive important correspondence, then a registered agent becomes more important.

Registered agents can provide a real estate investor with:

  • Privacy. Without a registered agent, you are listing your own name and address as the LLC’s contact information.
  • Growth and versatility. Without a registered agent, you cannot do business in multiple states.

If neither of those is important to you or your business, then a registered agent is hardly worth the expenditure and you may find the better choice to be to act as your own registered agent.

Please visit Royal Legal Solutions to learn more about the legal aspects of your real estate business and how to protect your assets.