Operating under a LLC??

[Hunter Thompson]

I just spoke with an attorney and he suggested to me to form a new LLC for each property I purchase. He said it would add a layer of protection if something were to happen on one property, then the other properties could not be affected because they are a completely different LLC. Then simply have my actual business a separate LLC and run it more as a property management for all my LLCs?

Do any of you have experience doing something like this, or know of any of the big players that do it this way? 

[Jonathan Twombly]

@Hunter Thompson I'm not sure what you are referring to, exactly.  But here's how we do it.  The asset management company has no ownership interest in the property LLCs.  It's connection is through an asset management agreement with the property.  The asset management company collects asset management fees from the properties in exchange for overseeing them.

The holding company has B shares in the property LLC. (The investors have A shares, which allow them to collect their preferred interest. We need two classes of shares to delineate between who receives priority in the distribution of proceeds.) The holding company receives its share of profits from the properties, assuming there is any left over when the preferred returns are paid out.

Hope that answers the question.