Business Structure(s)

[James Letchford]

Today, I went into contract on my first deal for a buy and hold property (with intent for BRRR).  I'm so stoked.

Going forward, I'll be picking up more buy and hold properties to add to my list.  Here's my question: What is the most efficient and effective way to set up my business entity to own this property and those going forward?

• Does it make sense to have one entity that owns each property?
• Should there be one entity that owns separate LLCs for each individual property?
• Should each property have its own bank account?
• Am I missing something else?

I may be getting ahead of myself, but I'd rather not double back on my efforts if someone else has already cracked this nut.

Thanks to those that contribute.

[David Dachtera]

@James Letchford,

You may want to limit the amount of value - or equity - in each LLC to losing one does not take a disproportionate amount of your holdings.

You'll want your entity(-ies) to be owned by other entities, NOT by human persons. This affords the best isolation and asset protections ("Control everything, own nothing"), but still requires full insurance for maximum protection.

One way of doing that is to have a revocable trust with you as the beneficiary. Form an S-Corp as an operating company owned by the trust. The Trust and the S-Corp then form a multi-member LLC "holding company" which is also part owner of the S-Corp. When you achieve income, you can then pay yourself from the S-Corp using the 1:2 salary / dividend split to minimize your self-employment tax liability while still showing an income to prospective lenders for personal credit.

Additional LLCs are likewise are part owned by the S-Corp and your trust so tey multi-member protection.

Remember to insure all of your entities and all or your holdings.

Hope this helps ...