What do investors do when they have multiple properties? Multiple LLCs?

Question

What do investors do when they have multiple properties? For example, 15 different properties for rentals, do they just create 15 different LLCs? For fix and flip, that would be a separate LLC too? Any clarification would be great. Thanks!

Billy Daniel · Answer

You'll want to check with your CPA and probably an attorney to get the best advice.  I know some investors who create an LLC for each and every property and then hold those LLCs under a single LLC.  It creates a lot of extra costs but provides quite a bit of protection.

Others will hold everything in a single LLC.  Each person is going to have a different opinion and your specific situation will likely influence what the best path is for you.

John Warren · Answer

@Kevin Alvarado for the most part, we keep each building in a separate LLC. This means having a separate bank account, and also having separate books come tax time (more expensive). With that said, this is something that would be different for each investor. If you own a bunch of 30k houses, you might throw a few into one LLC. If you own a 500 unit A class apartment complex, then you might have a different LLC own the ownership interest in your property level LLC. It is complicated, and this is why you need a great accountant and attorney as you grow.

With that said, this whole conversation has stopped more investors from getting started than almost any other. Find a deal and buy it. The asset protection becomes more meaningful as you have assets to protect. If you are house hacking then this is an irrelevant conversation, which is another thing that I see missed all the time.

Melanie Thomas · Answer

Hi there! I have seen investors do separate LLCs for each property that have a few properties to limit liability. Some investors with larger portfolios may opt for an umbrealla insurance policy instead of setting them up all separate. This is a liability insurance policy that covers liabilities above the limits on the properties primary insurance that provides an extra layer of protection. Fix and flips are often short term investments where investors may chose to hold them in a separate LLC to the short term separate from long term holds for liability protection reasons. Really a balance against the administrative burden. The best choice depends on the investors situation and priorities. I would consult with a professional CPA to help you determine what is best. I can recommend a few if needed. Good luck & happy investing!

Phillip Austin · Answer

@Kevin Alvarado Generally speaking, you would have a LLC for each property and separate bank accounts for each property. More expensive, yes. However, the protection and financial reporting greatly outweigh the cost.

With that said, speak with a CPA specializing in real estate for the best advice. Everyone's situation will be different and a great CPA will help you weigh all options.

Scott E. · Answer

I do all my flips under the same LLC. Different bank accounts but same LLC.

What do investors do when they have multiple properties? Multiple LLCs?

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