New LLC for each multi family?

1 Reply

I've formed an LLC for my first multi family property. It seems that Ive heard Brandon say in a webinar that each property should be under a different LLC.

Thoughts?

Thank you!

Hey @Roxanne Ibrahim

Great question! While you don't need to hold each investment in it's own liability limiting company, but it is a much stronger way to protect yourself. If you own all your properties in your personal name, then any law suit that exceeds or is excluded by your insurance can impact all your other investments and personal assets. The LLC will separate the assets you place in it from yourself, so if there is a lawsuit against one of the LLC properties that exceeds or is excluded from your insurance then the litigants can only have access to the other assets in that specific LLC. The benefit of having each asset is that if you have any legal issues with any of your properties, then it will be contained to that single property and will not impact the rest of your business or personal life as significantly.

The cost involved is that you will need to introduce additional entities, which takes time and money, as well as learn to operate them correctly to avoid any bookkeeping issues. There are entities which are built to scale with investors - such as the Series LLC - so once you get a system down it is just a small cost to add additional assets to your asset protection plan. Just depends on how protected you want to be and what level of risk you are willing to take.

We discussed it in the BiggerPockets Podcast episode 109, so feel free to refer to that also. Shoot me a reply if you have any more questions.