New investor- have a question about LLC structure. So let's say I have a Holding LLC in WY and an Operating LLC in MD where I plan to invest. Is it enough? Do I buy the investment property with WY or MD LLC? Which one I use for bank account creation? Do I really need one LLC for each property? A little confused about the multiple LLCs structure 😳
Attorney · Houston · Member since 2024 · 26 posts · 13 votes
2y
Arina, I think you're on the right track, but I have a few thoughts. First, I'd recommend that the LLC in MD own the property, and in turn, the Holding LLC should own the MD LLC. Second, you need to have separate business accounts for each entity. Lastly, something to think about: a few investors set up a management LLC that will not own any property but, in turn, deal with any third parties.
Attorney · Houston · Member since 2024 · 26 posts · 13 votes
2y
Arina, I think you're on the right track, but I have a few thoughts. First, I'd recommend that the LLC in MD own the property, and in turn, the Holding LLC should own the MD LLC. Second, you need to have separate business accounts for each entity. Lastly, something to think about: a few investors set up a management LLC that will not own any property but, in turn, deal with any third parties.
One more question - why would I need a business bank account for WY LLC is that one is not doing any transactions?
Regarding the 3rd property management LLC, I read about this recommendation in several places, but still do not understand why do we need to separate the LLC which buys the property from the property management?
Attorney · Houston · Member since 2024 · 26 posts · 13 votes
2y
@ariana alexic - typically, the management company is an empty shell entity (holding no assets) that is used simply for the purpose of dealing with third parties (signing contracts, leases, etc). As such, if you're sued or something similar happens, then in some cases, the theory (at least) is that the law of privity should protect your other entities. I am happy to discuss this further if you'd like, feel free to reach out.