What LLCs to create for STRs

Question

Hello!  Great group!  What type of LLC would you suggest for Short Term Rentals?  A series LLC or each STR have it's own LLC then one umbrella LLC?   Thank you!!  Kayla

John Underwood · Answer

You don't need an LLC for one mortgaged property. Get an umbrella policy if you feel like your high risk.

Transferring into an LLC could trigger a due on sale clause.

Nathan Gesner · Answer

The general rule of thumb is to create a new LLC for every $1 million in equity. If you have six houses and each one has $150,000 in equity, that's $900,000 total and you should consider setting up a new LLC for the next property.

I have three LLCs: commercial, residential, and storage. The commercial LLC has $1.5 million in equity whereas the residential and storage have around $500,000 each. I feel comfortable with that based on my situation.

Kerry Baird · Answer

I have been binge watching Mark J Kohler videos on his trifecta. I think it is a good idea to have an entity in the State where the rental houses are. Also, I don’t want to do foreign filings all over the place.

Kayla Luttman · Answer

@Kerry Baird. Thank you so much, that is great info.  My attorney wanted to put all of my properties in a Utah Series LLC but all my properties are everywhere, not just in utah.  Thank you so much!

Kerry Baird · Answer

@Kayla Luttman, I use a TX series LLC for my properties in Texas, one house in one cell.  I have a FL LLC for the property in Florida.  My mortgages are seller financing, so no due-on-sale to worry about.

Kayla Luttman · Answer

Thank you for your response!!  I really appreciate it!!

What LLCs to create for STRs

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