Would you use multiple LLC's for different rental properties?

Question

I live in Illinois and I haven't bought any investment property yet but hopping to very soon and have lots to learn at this point! My question is when buying a property for a rental, do I need to buy an LLC to help protect myself? And would I need to get an LLC for each different rental property?

Thanks for any information!

Spencer Heafner · Answer

@George Skidis

Great information! Thank you for replying!

George Skidis · Answer

Stating out, you should focus on good maintenance and management practices to avoid getting into a lawsuit in the first place and purchasing the appropriate amount of liability and property insurance.

Every LLC = 1 more Federal income tax return and at a minimum of 1 state income tax return.

If I was starting over I would put each purchase into separate Illinois Land Trusts. Then I would have one LLC that manages everything but owns nothing.

As the business grew I would consider up to three additional LLCs. One for high end property, one for middle of the road property and one for low end property. None of these "ownership" entities would be actively involved in the management end of the business.

Spencer Heafner · Answer

@Kathy Henley

OK, Thanks for the reply!

Kathy Henley · Answer

No hurry @Spencer Heafner. Property insurance is enough protection at the beginning, if you are working alone or with your spouse. A separate bank account for real estate activity helps keep clear records and keeps business separate from personal spending. One doesn't need separate LLC's unless ownership of the properties involves different partners.