how to start holding company .

Question

I have been buying rental properties with partners last 5 years .we own 12 homes . I and partner puts up down payment ,partners get investment mortgage to purchase home in their name. . I have 4 different partnerships .how can I put these homes under one company. and what would that be .we have about $2500 monthly cash flow and $ 500,000 equity . My goal is to have $ 6000 cash flow and 1 million in equity.

Brian Messer · Answer

thanks .I need to learn how to do this. Getting loans to buy more rentals has been hard .

Pierre Clark · Answer

In some states you can create a series LLC, which is an LLC that allows the formation of multiple equal sub-LLCs under it; the partners in whose names the properties are held would have to agree to quit-claim each property to the new entity or entities. You can quit claim one property to each sub-LLC of the series LLC. You or a corporation you form or LLC you form can be the Managing Member of one or all the LLCs. (Check and see if transferring a property this way would trigger a due-on-sale clause  in any mortgages on the current properties). You can set up the operating agreement so the incomes from the properties all flow to the LLCs; you could leverage or pledge one or more of the LLCs as collateral or a guarantor for additional mortgages.  Now you can do this in states which don't allow series LLCs; you would just set up one master LLC which would be the managing member of the other LLCs you create. This way is more expensive because you have to set up and pay for each LLC separately, whereas with the series LLC,  you pay one fee and then register as many sub-LLCs with the same name but a different number (I, II, III, IV, V, and so on) in the series. Hope this helps.