REITS vs LLC owning estrategy

[Victor Mercado]

Hi, im new in the real estate journey, one consultant offer me this strategy, holding LLC and each property in one each REIT, what do you think, Pros, Cons, or get traditional as one LLC for each property, thanks for your comments

[Melissa Justice]

Hey @Victor Mercado,

Welcome to real estate investing! Great question — and it's good that you're thinking carefully about your asset protection and structure. Here's a breakdown of the LLC vs REIT per property strategy you're being offered:
Strategy: 1 Holding LLC + 1 REIT per Property
Pros:
- A REIT (Real Estate Investment Trust) structure can offer tax advantages if set up properly.
- May make it easier to raise outside capital for individual deals.
- Could offer more flexibility for large-scale scaling or syndication.

Cons:
- Complex and expensive to set up and maintain — REITs require legal compliance, strict IRS rules, and often SEC filings if they’re public or large enough.
- Not typical for small or residential investors — this structure is usually used by institutional investors or very large portfolios.
- May not make sense if you're just starting or only holding a few properties.
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More Traditional Approach: One LLC per Property
Pros:
- Clean and simple structure — each property is isolated legally and financially.
- Common for small-to-mid-size investors; easy to understand.
- Lower startup and legal costs, easier bookkeeping.

Cons:
- Can still get costly if you own many properties (LLC fees, registered agent costs, etc.).
- Not as investor-friendly if you ever want to syndicate or bring in partners.

 Suggested Alternative for Beginners:
- Start with 1 LLC holding 1–3 properties (if they're low risk and low equity).
- As your portfolio grows, consider a series LLC (in some states) or a holding company LLC structure with subs under it.
- REITs are better saved for when you’re raising capital at scale or building a fund.

Bottom line - A REIT-per-property strategy sounds like overkill unless you're already working at a large scale. You'll likely be better off with a standard LLC structure, especially if you're just starting and focused on buy-and-hold or flips.

Let me know if you need a good company to set up the LLC.

Best of luck!

Melissa Justice

Investment Strategist at Rent to Retirement