Holding rentals in an LLC

[Jason Deck]

Hi everyone,

I am working on a few transactions for buy and hold properties, and I am trying to figure out how to hold each of them in individual LLCs.

I think I know to hold each property in its own entity. What I don't know is how to handle financing (at 80% LTV) in the name of an LLC. Does anyone have experience with this?

Separately, should I be using an LLC at all, or is a trust better? My primary driver is isolation of assets in case of any litigation, but there may be other considerations of which I am ignorant.

Thanks in advance for your guidance.

Jason

[Chris Jackson]

We have an individual LLC for each one of our properties.

Even with our SFRs, our holding company is the sole member of each of those property owning individual LLCs. This allows you to get a blanket loan on pools of assets from a bank if you wish. The holding CO is the LLC on the mortgage with the individual LLCs as the assets that are the collateral as well as any personal guarantees one makes on the loan.

Also if you sell as a bunch of SFRs as a package you can use the holding company entity that sold the package and can then have only 1 LLC, the holding LLC be the tax entity that can take advantage of a 1031 as opposed to 25 individual LLCs that must each now purchase a new property to adhere to the 1031 guidelines. ( I am not a 1031 exchange expert so don't quote me on that. I can give you a name if you wish if 1031 potential is a something you want to consider from the beginning so you don't paint yourself in a corner)