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Dustin Awtrey
  • St Louis, MO
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LLC structuring, holding company? Or not

Dustin Awtrey
  • St Louis, MO
Posted Jul 21 2022, 02:06

I am in the process of building an 8 unit complex. I'm going to have an LLC to put this development in. Then after this development I plan on doing others , each having their own LLC. My question is, should I have an LLC holding company to put all my different properties in? My thought was the holding company I would send all my monthly rents to, and all the expenses would come in and out of the holding company and I could eventually treat the holding company as a real estate acquisition company and apply for loans in the holding company's name. Is this dumb? Or should I just have a different LLC for each development and that's it

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Chris Seveney
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Chris Seveney
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Replied Jul 21 2022, 03:23

@Dustin Awtrey

Having worked for developers - typically they had a management company that was paid a management fee and each development was an LLC.

I wouldn’t say it’s a holding company.

If they were held for rentals they then had a property management arm as well who collected payments.

For these types of loans, find a local lender and build a relationship with them, they will want a personal guarantee but if your doing it consistently they typically wont care if it's in multiple LLC's they will look at the deal.

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Drew Sygit#2 Managing Your Property Contributor
  • Property Manager
  • Royal Oak, MI
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Drew Sygit#2 Managing Your Property Contributor
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  • Royal Oak, MI
Replied Jul 21 2022, 09:26

We have what you're calling a Holding Company as our Property Management Company.

Each Property LLC hires the PMC LLC as manager.

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Dustin Awtrey
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Dustin Awtrey
  • St Louis, MO
Replied Jul 21 2022, 11:18
@Drew Sygit

so all your money goes in and out of the pmc LLC? And the other llcs just hold the property?

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Drew Sygit#2 Managing Your Property Contributor
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Drew Sygit#2 Managing Your Property Contributor
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Replied Jul 21 2022, 14:57

@Dustin Awtrey all income and expenses, remaining funds distributed to each Property LLC.

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Dustin Awtrey
  • St Louis, MO
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Dustin Awtrey
  • St Louis, MO
Replied Jul 23 2022, 05:31

@Drew Sygit

@Chris Seveney

my thoughts are this,  I want to pay myself a monthly salary being that once this development is done im quitting my w2 and focusing on real estate development full time, so instead drawing my salary out of the the 8 unit llc, i would deposit all rents in the holding/management llc then take my salary and either leave the leftovers there or send back to the 8 unit llc

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Chris Seveney
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Replied Jul 23 2022, 05:42

@Dustin Awtrey

Talk to an attorney and cpa but if your drawing a salary an corp may be the way to go.

Also kkos lawyers do consults that can draft a setup for you / structure that is really cool - send me a message I will send you an example of what they do

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David M.
  • Morris County, NJ
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David M.
  • Morris County, NJ
Replied Jul 23 2022, 08:37

@Dustin Awtrey

When you say "draw a salary," do you mean a true salary where you have withholding tax, FICA, etc.? You do know that for LLC's, which are pass-thru entites (..unelss you elect to be taxed as C Corp), you don't need to draw a salary. You just transfer the funds out of the LLC's bank into yourself and annotate it as an owner's draw.

If you have going to have multiple properties, an umbrella / holding LLC might be useful. If you needed to transfer funds between LLC's the funds would go through this holding LLC. During some sort of audit or perhaps if you need to show your partners or investors the money trail, you wouldn't have to open up your personal books. You would just have to cough up the LLC's books.

As mentioned above, if you use a separate LLC to manage your rentals (which generally means the 8unit LLC just is "silent" and just holds TItle), thats fine too. Its just a different structure. But, I don't see why you'd send "back" to the 8 unit LLC.

Make sure you speak to a qualified professional or two to make sure you are getting what you need/want.

Good luck.

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David M.
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David M.
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Replied Jul 23 2022, 08:39

@Dustin Awtrey

sorry.. forgot to add the benefit of the owner's draw is less taxes... For example, no 15.6% self employment tax. The rental income stays passive. If you setup the LLC to pay your a true salary, then you have the SE tax and you've just converted your passive income to active income.

Again, speak to some qualified professionals. There are reasons to creating a true salary, but they are more "advanced/complicated."  So, depends really what you are looking to do.

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Dustin Awtrey
  • St Louis, MO
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Dustin Awtrey
  • St Louis, MO
Replied Jul 23 2022, 08:44
Quote from @David M.:

@Dustin Awtrey

When you say "draw a salary," do you mean a true salary where you have withholding tax, FICA, etc.? You do know that for LLC's, which are pass-thru entites (..unelss you elect to be taxed as C Corp), you don't need to draw a salary. You just transfer the funds out of the LLC's bank into yourself and annotate it as an owner's draw.

If you have going to have multiple properties, an umbrella / holding LLC might be useful. If you needed to transfer funds between LLC's the funds would go through this holding LLC. During some sort of audit or perhaps if you need to show your partners or investors the money trail, you wouldn't have to open up your personal books. You would just have to cough up the LLC's books.

As mentioned above, if you use a separate LLC to manage your rentals (which generally means the 8unit LLC just is "silent" and just holds TItle), thats fine too. Its just a different structure. But, I don't see why you'd send "back" to the 8 unit LLC.

Make sure you speak to a qualified professional or two to make sure you are getting what you need/want.

Good luck.


Ya I guess I would keep all funds in the management/holding company LLC and what I meant by drawing a salary was yes just basically making a monthly draw into my personal checking account. And on a side note, what do you think about a series LLC? Making the parent LLC the management/holding company and the child LLC the LLC's that hold the title for the different properties?

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David M.
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David M.
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Replied Jul 23 2022, 09:21

@Dustin Awtrey

Just make sure you operate the LLC correctly to maintain your corporate veil. Remember, that is a legal issue, not strictly an accounting issue.

As for series LLC's... all the more "informed" opinions say not to use them. They are still relatively new and very little legal precedence with them. I assume you have checked and they are available in your State? Lets face it, either way investing with legal entities is a hassle. You need to be careful of your corporate veil, another bank account, probably another business credit card, all the associated bookkeeping, etc... But, I see it as part of the cost of doing business if that's the way you want or need to go (especially since you are doing a commercial property).

I've never really heard much about the concept of having more than one Title in a single LLC WITH a management LLC. Usually its multiple properties being renting out from the owning LLC or what you have described. Not sure why you couldn't use one LLC to take Title and use another LLC (of course you need a contract signed between the two) to rent it out and operate the property.