Do you create a new LLC per project?

Question

Hi everyone,

I’m getting into the flipping business and trying to decide on the best legal structure. I know the standard advice for rentals is "one LLC per asset," but does that really hold up for flipping?

The Case for a Single LLC:
My instinct is to run everything under one main entity. It seems much more efficient for:

• Bookkeeping & Admin: Dealing with one set of bank accounts and one set of filing fees (vs. paying $800+ per entity in some states).
• Credibility: Building a stronger credit history/relationship with lenders and vendors using a single, aging entity.
• Taxes: I was hoping this would allow me to prepay for materials at year-end to manage taxable income, though I've heard the IRS "Inventory/Dealer" rules might block that strategy regardless of the structure.

The Concern:
My main worry is liability. If I have 2-3 projects going at once under one LLC, am I risking cross-collateralization? (i.e., a lawsuit on Flip A freezing the assets of Flip B).

For those of you doing volume, do you isolate every flip in a new LLC, or do you rely on a single entity + insurance? Also, does your strategy change if you cross state lines?

Appreciate the insights!

Peter Mckernan · Answer

I am not a CPA or attorney who you should consult first before actually proceeding with what you are going to do..

I do an LLC for flipping on deals for myself, all flips in one llc not multiple flips in multiple llc if I am the only one doing the deal. If I am JVing, I have an LLC separate for that llc and put that property in that LLC, and my rentals are in a separate LLC.

It really all depends on your situation and tax/financial position. Talk with your attorney and CPA before moving forward on how you do your structure.

Ron S. · Answer

Thank you @Peter Mckernan for the reply! I'll consult with professionals as well.Just so I understand you correctly, you mean you have:1. An LLC for deals you do yourself.2. An LLC per JV e.g. Peter and PersonA, Peter and PersonB, Peter and GroupC etc.3. A single LLC for all your rentals? This one is unconventional from what I know.

Also, would you please mind elaborating a bit about your reasoning for your choices? I think my intuition is correct but it would be helpful to have some anecdotal experience. My intuition is that there is no need to close the flipping LLC after a deal is done. Also, if you have your insurances there isn't much risk to having multiple concurrent deals under the same LLC. Would that be matching what you experience?For JVs it also makes sense to have one per <Peter, Partner(s)>And even though this is the flipping forum, I'm still going to ask because you got my curiosity. Why the rentals under the same LLC?Thank you!

Peter Mckernan · Answer

I would rather have a separate LLC doing deals with another partner so if there is an issue on that property and legal stuff comes up they go after that LLC (they can go after all my LLCs), but it gives division in JVs. I do not want my LLC that I am doing myself to be entangled with someone else that has nothing to do with those flips that I am doing myself. We just notarize the grant deed in their LLC and mine, so two on title.

My rentals are under a separate LLC, but it is a passthrough entity and my CPA was fine with them being in the same as what I am doing flipping with as well which I have put a couple flips in that LLC.

Aaron Zimmerman · Answer

@Chris Seveney does that entity have single member LLCs or just one entity total?

Chris Seveney · Answer

Both.

Ron S. · Answer

Maybe an obvious question given that this is the flipping subforum but would those be rentals or flips?

Do you create a new LLC per project?

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