Business Structure - LLC for Each Property?

Question

Does anyone use a master LLC as a holding company that owns an LLC which holds each individual property? Is there a tax rationale to this? Is there any benefit to this or is it just as easy to acquire each property in a separate LLC?

Drew Sygit · Answer

Main benefit of Master/PM LLC is you can use the Master LLC ban account for most of the year. Only need to "settle" at the end of the year.

Juan Yepes · Answer

Hi @Russell Cate

Creating a holding LLC and sub LLCs for each investment property makes sense if you are trying to scale a portfolio. If you’re only looking to buy a few properties, just the LLCs for each property will do fine.

We help investors all the time get financing when purchasing under LLC. We have also helped investors that use holding LLC structures.

It’s tricky but if you have the right lending relationships, it’s possible.

Greg Scott · Answer

Regarding your first question, since most LLCs are pass-through entities, there is no tax benefit.

Regarding your second, people do all kinds of different things.  They put properties in their name, they put several properties in one LLC, they have one LLC per property, and they have one LLC per property owned by a master LLC.  Another option in some states are series LLCs.  All of those are viable, but all of them have their downsides.

When I first started, I just put properties in my name.  Yes, there is some liability risk but I ran my properties well and had great insurance coverage.  On the other extreme, I had a friend with a Michigan LLC for each of his SFRs and they were all owned by a Wyoming LLC.  Because he used an LLC, he couldn't get agency financing so paid more interest and had a whole lot of LLC structure and cost he had to deal with every year.