I am looking into the usage of LLCs to house investment property. From others' experience, is it necessary to hold each property in a separate LLC? Or is it more common to create one LLC to own all properties? This is in reference to single unit condos - purchased and held for rentals.

Sarah:

I would say for larger projects, such as an apartment, you absolutely want a dedicated LLC for that property, but for smaller projects, it may not make sense. Managing, maintaining, and operating a bunch of LLCs can become a bureaucratic headache with minimal added asset protection benefit. Also, depending on your situation, it may not make sense to have an LLC at all.

Originally posted by @Sarah W Adler :

I am looking into the usage of LLCs to house investment property. From others' experience, is it necessary to hold each property in a separate LLC? Or is it more common to create one LLC to own all properties? This is in reference to single unit condos - purchased and held for rentals.

 Hey Sarah,

It is a really good question. It can depend on what your current assets (professional and personal) are and the type of exposure you face. If you owned several properties and got into a lawsuit without and liability protection then a bad judgment could allow the lawsuit to impact all of your personal and professional assets until it has been satisfied. In a perfect world you would keep each asset in it's own LLC, and then use a different LLC to run your operations - you could even throw in additional LLCs for brands you own. But there are costs and upkeep that investors need to justify, so it depends on your investment strategy and tolerance for risk.

This is an article that covers the main principles of asset protection to keep in mind when setting it up. If you have multiple investments you can also look into the Series LLC, which is similar to the traditional LLC but allows larger investors to compartmentalize their assets more easily.