How should properties, owned by a LLC, be managed

Question

In the next few months I'm looking to purchase my first property and I've read everything i can but seem unable to find an answer to this particular question. I plan to own the property in a LLC and more properties to come since I'm hoping to utilize the BRRRR method. If I manage the properties myself, what entity does the actual managing? Ultimately I plan to have several LLCs for the multiple properties. Not trying to do a LLC per property but I also don't want all my eggs in one basket... I want a happy medium. Can I manage properties from different LLCs, all owned by me, under one name? A separate property management LLC? As a sole proprietorship? Does each LLC have to manage their own properties thus requiring several websites, business cards, etc...

I know some of this is kind of long term thinking, and the business card thing is hardly that important, but since I'm unable to move on my first rental until I get back stateside I may as well strategize about the growth I plan to have.

Bryan Smith · Answer

Thanks for the advice. I'll definitely check out the podcast when I find a more stable internet connection.

Crystal Brooks · Answer

@Bryan Smith I would check out podcast 109 that @Scott Smith did on this topic.  He promote the Series LLC and also has published quite a few articles that may help to guide you in the right direction.  Here is one that I think is very helpful: https://www.biggerpockets.com/blog/the-traditional-llc-vs-the-series-llc-which-is-better-for-real-estate-investors

Greg Dickerson · Answer

@Bryan Smith best thing is discuss with your attorney. You always want to keep each property in a separate LLC and your operating company is a separate LLC that is the manager of each LLC. This keeps liability away from you personally and separate from each other so the one does not affect the whole.

You need to find a lender that is ok with this structure. You may need to shop several.

Amit Saini · Answer

I think you're overthinking the LLC system. If you're relatively new and acquiring your first property, do it on your name because financing will be easier and you'll secure favorable rates. Once you've amassed a small portfolio you can consider create a LLC entity and transfer properties to the LLC. You can do one LLC for many properties or a "series LLC" which is permitted in some states. Umbrella Insurance is a good option when starting out. Hope that helps. All the best!Edit - regardless of whether you hold the property in your name or LLC, you can still do the property management yourself or choose a property manager. If you get into much larger sized multi-family deals (50+ units), you'll find more complex legal structures separating the PM entity into its own LLC.