Multiple LLC for rental properties?

Question

How does LLC work? Should you open separate LLC for each rental property or is there a better way to do it like umbrella kind of LLC? Open different bank account for each rental property? Buy separate landlord policy for each property or buy one insurance that would cover all the rental properties? I am talking about residential townhome properties not an apartment complex

Tayo Black · Answer

Check out the book Limited Liability Companies for Dummies by Jennifer Reuting, very good place to start.

Phil Moore · Answer

If your goal is asset protection, I’d also do some research into trusts. It is possible to structure the agreement in such a way that allows for both anonymity and asset protection where a single LLC is beneficiary to multiple trusts or vice versa.

Jason Marino · Answer

Hi Guka,

There are a few ways to organize asset protection structures. You could have a single LLC for multiple properties, you could have multiple LLCs with a few properties in each entity, or you can have an LLC for each property. The last option is the most risk averse, as you are separating each property into its own entity, and, when done in the right way, this will separate the assets into different compartments for limited liability purposes. There is additionally something called a Series LLC, which has the effect of multiple LLCs. It is really a single LLC that has the ability to create individual LLCs under it. As far as insurance is concerned, there are a variety of options as well. Many investors have insurance policies that are related to each property, and they extend this coverage with an umbrella insurance policy.

Greg Scott · Answer

You can buy single family rent properties (and townhomes) in your own name.  Or, you could create an LLC to hold multiple properties, Or you could create an LLC for each property (or a series LLC) and hold them that way.  The best solution for you will be different than for someone else and each path has positives and negatives. None of them is the "right answer" for everyone.  This is why it is good to talk to advisors that can help you with your specific situation.

Regarding insurance, no matter how you hold the property, insurance is a good idea.  Most policies are property-specific.