LLC's on Every Rental Property?
Hi everyone,
I've been trying to get into real estate for the past few years through my mom who owns some rental properties. I have seen her struggle managing these properties over the past years. That's when I realized I enjoyed this after helping her clean and work on the properties. It wasn't until this year that I through myself within her side hustle to show her what it could be for a full business. I started working on raising the under-market rent and switching to RentiRedi for easy tracking of the money.
As I'm trying to do this it seems she has almost all her properties in all separate LLCs. When I worked at a small real estate firm over the summer they had a few properties that were roughly 10 million dollars in one LLC. My point is, is it necessary for a way smaller portfolio to have 5 plus LLCs? I argue this because makes it a pain to transfer money for lacking proprieties. As well it cost her money from her cash flow. I completely understand why she does this as it's keeping every property safe from each other. Anyway, I am grateful for what she has done and glad she tries to keep these properties safe. Let me know what you think, I could be completely wrong to think this; I am still learning.
Also as a 19-year-old, I am looking for a mentor to help me as I am looking to buy my first rental property soon. Any advice on what I could do or go to try to make that connection would be helpful. Would love the input and advice for me and my mother as well. Thanks.
If you are transferring money from one LLC to another someone could probably "pierce the corporate veil". I know a lot of people use separate LLC's but not everyone does, it's expensive and it can make it harder to get financing. Good for you wanting to be involved and asking good questions. If you want to be an investor yourself I'd recommend you talk to a lender and create a plan, borrowing money is usually needed in REI and it can be a complicated step that usually requires planning. I have found that buying a primary residence can be an easy ish way to get a loan.
#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
- Investor
- Austin, TX
- 5,506
- Votes |
- 9,861
- Posts
#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
- Investor
- Austin, TX
My rule of thumb is 3 properties per LLC.
Hi Max,
I think that something to kind of "split the difference" so to speak could be a series llc. This allows for you to create multiple children underneath one parent llc. This allows for compartmentalization of the properties without the complications of having so many llcs. I hope this helps.