Questions I'm going to ask my CPA about my rental business

[Stephen Shelton]

I own 3 SFR rentals and would like to continue growing. Currently they are not setup under a business entity, but I think it's time to get this done before buying Property #4. After completing Property #2, my CPA said a few things that now appear time to resolve. The big one was his statement that once I hit 4 properties I become a "professional landlord" and "things" change. I'm going to setup a meeting this week and I was hoping to get feedback on the question list I have come up with.

Thanks for any advice

Steve

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Is it time to use an LLC to protect the assets?

Would an appropriate structure be to have each house to be owned by its own LLC and then have an umbrella LLC own them all?

How would creating LLCs impact the houses’ mortgage, insurance, title, and tenant lease?

Would each house need its own bank account, security deposit account, and credit card in this setup?

• IF YES: Should I terminate my existing business related accounts and create brand new accounts with new account numbers for each house to avoid confusion with the old accounts?
• IF YES: I like using a CC to pay, but how would I get a line of credit on each property? My last credit score: 805, but would “the industry” really allow me a card for each house and my own personal card?

I was once advised here that owning a 4th rental property changes things and that I’d be considered a “professional landlord” at that point.What does this mean?

Does that professional landlord status occur if the homes are owned by LLCs and not me?

[Jana Cain]

@Stephen Shelton I just came across this post and am curious what your CPA told you when you brought these questions to him. By "professional landlord changes things" did he mean that you would now be considered a real estate professional and therefore eligible to take advantage of real estate losses vs a non-real estate professional? I'm not familiar with using the term "professional landlord" in the context of driving tax strategy (just "real estate professional" vs "not a real estate professional", which is determined by hours involved, not scale).