How to structure multiple SFR accounts

Question

Hey BP. Wanted to ask how experienced investors set up owning multiple SFR in terms of bank accounts. Is there one bank account with multiple checking accounts attached to it or just multiple banks with multiple accounts? Interested to see what the answer is because I am about to be there. THANKS!

Scott Smith · Answer

To maintain the liability protection you would need to operate each company separate from each other. This means that each LLC would have it's own LLC, bank account and checking accounts. The only exception to this would be if you are operating through a Series LLC, which allows the formation of "child" series under the main "parent" Series LLC entity - this type of structure allows you to operate multiple assets from a single bank account while still compartmentalizing liability. For many investors with two or three LLCs it isn't much of an issue, but for investors who continue scaling up it can be a huge hassle - and the risk of accidentally using the wrong card and comingling funds increases.

How many entities are you working with? And are you operating with only a single property in each LLC, or are you placing multiple properties in some of the LLCs?

Soh Tanaka · Answer

One bank account per company (LLC for example.) Multiple bank accounts mean multiple cards to carry around. Setting up a savings account for a security deposit may be the right option also, depending on the rules of your state.