LLC structure for Single Family Portfolio

[Uma Subramaniam]

My husband and I are real estate investors in Dallas-Fort Worth area in Texas. We currently have 15 Single Family rental properties on our personal names and are in the process of getting a commercial portfolio loan for 70% LTV. We are exploring options to set up the correct LLC structure.

1. Single LLC to hold all 15 properties - Lender prefers this to keep the underwriting simple and helps us with lower origination cost

2. Series LLC - Seems not every one is on the same page (CPA, Attorney, Lenders, Banks, Title Company, etc) - An Attorney is asking $6,500 to set up the LLC and series. Any recommendations?

3. Single Member Disregarded LLCs for each property - Will a single mortgage for all properties affect asset protection?

Any suggestions on an efficient LLC structure both from the asset protection and property management perspective? Thanks in advance!

[Ahad Ali]

For option 1. A single LLC holding all the properties, it does make things like filing taxes or underwriting simpler as you have every property under a single LLC. You will just need to be meticulous with the information so it is correct.

For option 2. A series LLC would isolate each property to itself so any liability from one or 2 properties would not affect the others. But for taxes is considered a single entity making tax filing simpler for you.

For option 3. Single Member Disregarded LLC for each property would essential entail no change on taxes as you would still have to file them on your personal return. The benefit of this would be each property is separated and no one individual property liability can affect the others.

Bare in mind if you form the LLCs with a single member you will need to file the taxes under your personal return. But if you have at least 2 members then it will be a separate filing.

I believe the reason for quoting $6,500 to set up the series is because they need to essentially open up an LLC for each individual property and then a main LLC to be the owner of all of those LLCs. As such they are effectively opening up approximately 16 LLCs in order to create the series. I do suggest browsing around and getting quotes from others to find what you are comfortable with.

Ultimately a series LLC would probably be the most beneficial but it depends on your circumstances and what you want out of it. I suggest contacting a CPA or Attorney who is well versed in real estate and discuss further with them.