Using two LLC's (Property Holding and Management Company)

[Scott Bartlett]

After talking to an attorney about LLC's and etc, it was mentioned that some clients of theirs will use two LLC's for their rental properties.

One LLC would be the "holding company" with all of the properties in the LLC's name, and the Holding Company would then LEASE the properties to the "property management company", which would then lease the property out to tenants.

So that if there was ever an issue, the "property management company" would be responsible and face liability, and not the holding company, but since the property management company doesn't have any actual "assets", there is nothing to pursue in a lawsuit?

[Dooreuhn Cee]

Agree with @Will Barnard .  Furthermore, there is nothing stopping a lawsuit against the asset company in addition to the property management company.  Lawyer use scorch the earth strategies, in other words, sue everyone associated with the property.

Best advice I received was to choose insurance over LLC structures for liability. About the same amount that the lawyer will charge you for setting up several companies can be used to buy an umbrella insurance policy.