One LLC per Rental Property? How to Manage Them Efficiently?

Question

Hello fellow investors,

I am contemplating setting up my new rental property investment business via a Wyoming or Nevada S Corps holding company and one LLC per rental property I buy in multiple states. However, if I get to the point where I own even 10+ properties, keeping separate bank accounts and other requirements for each LLC seems like a headache....If anyone has a similar structure, please share best practices and pitfalls to avoid in managing multiple LLCs. Thanks!

Matthew McNeil · Answer

No blending of personal funds with the LLC. Separate bank account. Insurance policy must be in name of LLC.  Asset needs to be QC'd into LLC.  If PM is used, the Management Agreement needs to be in name of PM.  No money can be given to LLC unless it clarified as a loan.  Signing checks must include the identification by signatory as "Managing Member", etc.

Jerry W. · Answer

@Robert Carlson, unless you have extremely lucrative properties I would NEVER make one LLC per property, not even using a series LLC.  For the LLC to provide protection it needs to not have the income and expenses comingled with other properties.  While it is not a bad idea to have an individual idea of expenses and income for each individual property I could never do it.  I often buy 4 or 5 toilets and 2 or 3 water heaters at a time, and heaven forbid I need to dig up a sewer line or repair a foundation on one property.  I don't want to have one LLC borrow from 2 or 3 others in order to pay a large unexpected expense, keep dozens of different checkbooks, dozens of annual business meetings or minutes, let alone how to expense tools or overhead like an office , phone, car, well you get the idea.  It can be done, but if you make $100 to $200 per month per unit that is average.  There are man months that you are in the red and many where you make money.  For me it is easier to use one large account for many rentals and a lot easier doing books.  I currently have 3 separate companies, but well over 30 units.  It works well for me, but I dont want all of my time spent doing books.  Now if you own multi family properties it might be different.

Alicia Yoder · Answer

@Robert Carlson I’m in Texas and have a series LLC. It costs $25 to file a dba online which is all I have to do for each new property I purchase. I don’t have separate bank accounts for my properties. I just have separate chart of accounts in QuickBooks that correlate with each property/series within my LLC. From my understanding with my lawyer, my LLC operating agreement spells out my intentions for my series as well as my accounting requirements for those series. This is enough to defend my structure should the need arise. Moral of the story, spend a thousand bucks upfront for an attorney to set you up with a comprehensive operating agreement and then you can easily/cheaply manage going forward. Just my two cents!

Kerry Baird · Answer

@Matthew McNeil, thanks for the detail.  I’m grateful~

Calvin Ozanick · Answer

I think that using one LLC per property could be beneficial from a liability standpoint. However, most of my clients own all of their properties under the same LLC and it seems to be pretty simple for them. We create detailed monthly and annual reports which shows everything broken down by property within their portfolio. You need to determine what makes the most sense to you in order to properly organize your books.

Matthew McNeil · Answer

What is your LTV per property?  If its high and you carry $1M insurance per property then why do you need an LLC?

Mike S. · Answer

@Robert Carlson

I am having one bank account per LLC however I am collecting all rents and paying all expenses through a separate management C Corp that is under contract with all my LLCs

Only quarterly I am transferring some of the profit from the management Corp to each LLC then to the holding WY LLC as distribution.

Dan Tran · Answer

@Robert Carlson look into a series llc. Basically  you set you up one llc and have house one in series 1, house two in series 2, etc. it will make everything into one llc but keep them separate. SOME states allow this so you should look into it.

Ronald Rohde · Answer

Both viewpoints can be valid, the key is to analyze your own investor situation, needs, and risk tolerance. What works for Jerry may not work for someone with only 4 units and risk adverse.

Robert Carlson · Answer

Thank you @Alicia Yoder! Very helpful!

One LLC per Rental Property? How to Manage Them Efficiently?

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