One LLC or Multiple LLCs?

[Jill Keller]

Hello,

I have a 3 properties under my personal name that I'm looking to move ownership to an LLC. Should I get 1 LLC per property or one LLC for all 3 properties? I know multiple LLCs would mean more complicated taxes but I'm trying to see what would be logically better from a legal standpoint or if it matters?

Also, does it matter if it is a single-member LLC or multiple (2 person) member LLC?

Thanks!

[Jason Marino]

Hi Jill,

There are varied opinions on this. A single LLC will be easier to create and maintain than multiple LLCs, but all of the properties are in the same entity and are available in a lawsuit that involves a single property. As you noted, with more LLCs, you will have more maintenance and more expenses. The benefit of having each property in a separate LLC is the ability to place each property in its own compartment. If the LLCs are created in the right way and are maintained as they should be, this structure will separate the properties for limited liability purposes, and the liability generated a property owned by a single LLC will not touch the properties owned by the other 2 LLCs.

Something that you may want to consider would be the use of a Series LLC. This type of LLC can replicate itself into multiple Series. Each Series can be maintained under the Parent Series LLC, meaning you can have a single registered agent and Corporate Compliance for the Parent Series LLC. At the same time, if the individual Series are created in the right way, they will be considered separate for limited liability purposes. They are fairly simple to create and work well for holding assets.

[Eliott Elias]

I keep one LLC for easy record keeping

[Luciano A.]

@Jill Keller

If you are just starting out and don't have millions in net worth don't stress yourself out and do anything but insure you have proper insurance and get an umbrella policy. If you have a mortgage the bank is your partner. If you get sued they won't just hand over the property after all they are in the first position on the lien. Most attornies look at the landlord and their insurance. Insurance when starting out is the easiest way to add protection. Most who create an LLC don't maintain it thus the corporate veil is punctured. Just setting up is just one part of the equation. The advice I have given is what I would have given my younger self who had a bunch of LLCs, Living trusts, land trusts, etc. Not worth it until you start having tons of equity and or have a high net worth. Until then focus on acquiring more rentals and enjoy growing your portfolio.

Best of luck 
 

[Frank Greg]

@Jill Keller:

Hello,

I have a 3 properties under my personal name that I'm looking to move ownership to an LLC. Should I get 1 LLC per property or one LLC for all 3 properties? I know multiple LLCs would mean more complicated taxes but I'm trying to see what would be logically better from a legal standpoint or if it matters?

Also, does it matter if it is a single-member LLC or multiple (2 person) member LLC?

Thanks!

It depends on the nature of the risk each property faces. If property A is involved in a lawsuit resulting in a liability and assets are insufficient from A, do you want creditor to go after properties B and or C to cover any deficiency? Where you incorporate the LLC is also important. Different states treat a single member LLC differenty when it comes to being able to legally pierce the corporate veil.

[John McKee]

I use an LLC for each property. They are treated like separate entities anyway so attaching an LLC to each one for $50 a year is not a big deal to protect you from liability. The amount of work on the taxes is the same.