Another Entity Question

[Account Closed]

Hi BP Family:

I apologize in advance if this question has been answered in previous posts. I did several searches, however the results seemed to be fairly scattered and I wasn't able to find an exact answer to my situation. 

Scenario: I plan to acquire 2-3 self-storage facilities in the next 1-3 years. My attorney recommended that I setup the following entity structure:

1) Holding Company LLC

2) Management Company LLC

3) Additional LLCs to hold the actual properties purchased

The way my attorney explained the above setup was that the Holding Company LLC in (1) would do nothing more than own the individual property LLCs in (3). In addition, The Management Company LLC in (2) would be separate from the other LLCS, own nothing, but serve as the "point person" for each individual facility when it comes to collecting rents, paying expenses, etc.

Legally this setup makes perfect sense to me. I'm having a harder time understanding how the money flow and accounting between entities will work. I realize a good CPA will help but was hoping someone with this type of structure would be willing to share their real world experience. 

Specifically, do each of the individual property LLCs in (3) above have bank accounts and separate accounting records? If the Management Company LLC in (2) is receiving rents and paying all the expenses for each property, what actual cash or expenses run through the property LLCS in (3). Secondly, what money flow occurs between the Management Company in (2) and the Holding Company (LLC) in (1). Lastly, are all entities required to file tax returns and does this structure, notwithstanding the liability advantages, seem overkill?

Thank you!