separate LLC for self property management

[Jeff Kochtanek]

What's up BP!

First of all, thank you Josh, Brandon, and all the great contributors for your tremendous knowledge!! Brief first post intro: I'm a B&H investor and have been reading & listening to BP for a while and gaining momentum. I live in KC and have several rentals, am currently constructing 2 townhouses, and am actively searching for more deals. Short term goal is 10 Class A/B self-managed rentals to capture historically low fixed rates creating a “passive” income base in addition to my great full time job. Bigger picture I want to find my niche and move into larger deals or more volume.

Now to my question...I have an umbrella policy and am looking to add LLC(s) for additional protection. Considering future rental portfolio growth, is a separate LLC for self-property management beneficial in addition to LLC holding companies? Assume I soon will have >1 LLC regardless of this question to limit equity per LLC. I see the PM LLC acting as the funnel for all incoming rent & outgoing expenses (1 checkbook, 1 debit card, etc) that regularly distributes profits to LLC holding companies AND keeps tenant interactions with an LLC that doesn't have assets. Downsides include trickier reporting of transactions between LLCs and other complexities/expenses. Would this make my accounting easier or unnecessarily more difficult? I already have a general CPA and a RE attorney but don't have good feedback on structure yet (currently seeking KC area REI CPA if anyone has suggestions!). Thanks in advance for your input or links to related posts.

[Jeff Kochtanek]

Thanks guys, great to hear what others are doing while obviously keeping in mind our situations are different. My RE attorney has a PM background and agreed a separate PM LLC was a good plan, but my information gap seems to revolve around taxes/accounting. Hopefully I can find a Kansas City area accountant specializing in RE.

@John Van Uytven thanks for the info, I don't plan to hire PM staff yet but perhaps my direction is like what you former employer had. BTW I love DFTBA and may have to borrow that!!

@Jonathan Towell congrats on your success so far. Seems your PM LLC is the same theory I am planning but at a larger scale. I was very intrigued by the Series LLC but my attorney talked me out of it due to lack of case law. Interesting that banks have made it more difficult, general lack of knowledge seems like a common theme with the series.