Strategy for structuring business to minimize taxes and liability

[John Pierce]

Hi.

Last night at a dinner party I found myself in a conversation with an entrepreneur about taxes, corporate veils, etc. He asked me how my rental properties were structured and was shocked to discover that I personally own my properties with no LLC or corporation as a middleman.

 When I first started investing in rental property I had limited assets, so insulating myself from liability was not high on my list of priorities.   As I acquire more and more assets I become increasingly interested in insulating myself from unnecessary liability. 

I own several rental homes with my father.  These are all owned outright.

I own several more rental homes with my soon to be wife.  Some are mortgaged, some are owned outright.

I was considering starting an LLC with my father and quitclaiming our properties to the LLC.

I was considering starting 2 more LLCs with my wife. The first LLC would hold the rentals that we own outright and any rentals we acquire in the future. The 2nd LLC would be a property management LLC (I self-manage) that manages the houses owned outright and the mortgaged houses that cannot be held by an LLC.

Does this structuring make sense?  Are there any issues that I am not considering?

[Stan K.]

@John Pierce You should be asking not only how much do they cost, but also how much they can save you. In my experience, the amount of money, problems, and headache they can save far outweighs their cost.