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Todd M.
  • Real Estate Investor
  • Minneapolis, MN
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2 LLCs currently, but want 1 LLC to help the other financially

Todd M.
  • Real Estate Investor
  • Minneapolis, MN
Posted Nov 24 2022, 10:50

Heyo,

I'm getting lost in trust, LLCs, series LLC, umbrella policies, etc. Been searching all over hell and back, so it's time to reach out for suggestions.

Here's my situation and what I'm ultimately hoping to do.

Situation

Property 1: I operate this property in an LLC and it's cashflowing nicely. (bought the property personally about 15 years ago, quit claimed it to the LLC.)

Property 2: I operate a this property in a different LLC and it is NOT cashflowing. (again, bought the property personally, quit claimed it to the LLC)

What I'm wondering about is getting Property 1 to help Property 2 financially.  As in, have Property 1 pay for Property 2 mortgage until Property 2 cashflows better.

I'm guessing there is going to be ways to do it, but with possible liability exposure trade-offs, but I don't know.

Does my description and what I'm hoping to do make sense?  

Happy to help clarify anything.  

Happy Thanksgiving,

Todd

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Bill Brandt#1 General Real Estate Investing Contributor
  • Investor
  • Las Vegas, NV
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Bill Brandt#1 General Real Estate Investing Contributor
  • Investor
  • Las Vegas, NV
Replied Nov 24 2022, 18:43

Are you the sole owner of these llc’s? If so they don’t matter/count. Personally I would dissolve them and go with umbrella if there a bunch of equity, but if you need to keep them how about merging them? Otherwise simply write lo and from one to the other. The interest will be an income and and expense. If you insist on keeping them ask your cpa how they’d prefer you do it. These would all be disregarded if you’re the only owner so you could pay them personally as well in the form of a loan or capital contribution  

If you’re not the sole owner you really want the cpa involved and maybe a lawyer. 

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Replied Nov 24 2022, 18:59

You need to talk to an attorney and CPA, but the most obvious thing would be for property 2's LLC to do a 0% interest loan to property 1 with grace period.

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Ryan Seib
  • Attorney and Real Estate Broker
  • Madison, WI
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Ryan Seib
  • Attorney and Real Estate Broker
  • Madison, WI
Replied Dec 1 2022, 13:41

Good day and most people use just a single LLC for both properties. Either way, most tax returns would treat them as one (essentially), because all the numbers get combined in on Schedule 1/Schedule E. Perhaps a tax accountant can jump in if not or other nuances though. I hope that is useful as a starting point.