Is it best to set up a Series LLC and then add each house as a separate entity under that? Or just set up separate LLCs.? We are beginning to add lots of houses to our portfolio and want to have the right amount of protection. We don't want one bad apple to bring down the rest so to speak.
Any information on protecting us as landlords and ease of tax prep. is appreciated!
@Ronda Doxey I would contact a good CPA and lawyer to answer your question. There are so many little details that I would only trust a professional.
Read Garrett Sutton's book Loopholes of Real Estate. It deals primarily with asset protection.
Without knowing how many assets, what type (residential/ commercial) if using debt or leverage, if using partners, what the overall financial picture and goals of the person are, if series LLCs are legal and recognized in your state, etc, we all be fartin' in the wind trying to answer this.
Seek competent legal and tax advice always!
@Steve Vaughan - Series LLCs are legal in Texas. We are buying single family homes and with partners. We plan on buying many.
@Douglas Orr - Thanks! Will do!
@Ronda Doxey , Generally speaking, a Series would be great for this. However, when you mentioned partners, I just want to make sure you understand how mosts series work. Will you be using the same partners on all of your rentals? If not, the Series may not work. Utah Series don't allow for different Members on each property or each baby within the Series. If this is the case in Texas, and you want to use different partners on each property, a Series will not work for you. If you are using the same partners on each property, the Series is a great option for asset protection while reducing your accounting costs.
@Cody Backus Thank you! Yes. All same partners. So, I guess now, just need to figure out if it is really necessary or the best thing for asset protection to go this route. Thanks for your input. I appreciate it.
Keep in mind the administrative expenses associated with working with a series LLC. To achieve the protections the structure is intended to achieve, each series must be insulated from the others and keep separate books, bank accounts, and records. Is it worth managing different bank accounts for each residential property? Series work well for larger commercial investors where each series controls one multi-million dollar investment so the scale of the investor's operation supports the ongoing administrative expense of maintaining a series LLC, but the same is not true for the smaller investor. You may be best served by lumping 5 or 6 properties in each LLC and reorganize if/when your operation gets big enough to support a more complicated structure. Go make money and undertake protective measures that are proportional to the amount of wealth you accrue. Setting up a complicated structure before having the assets or equity to protect is akin to building a vault and having very little to put in it. Start with a lockbox, then move up to a safe, and then someday you may need to build the vault.
@Joseph B. Davisson - Extremely helpful! Thanks.
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