LLC advice needed - one per property?? That seems crazy!

[Lesley Whitley]

I met with an attorney (I am in California, but investing out of state) about starting an LLC that we can use to purchase properties. I was shocked when my (California) attorney STRONGLY suggested that we need to have a separate LLC for each property we have. Plus he thinks we should have a corporation that is the umbrella over the smaller LLC's. In Calif there is a minimum of $800.00 taxes per year, per LLC .... so that would be $8,000 per year just in taxes for 10 corporations (for 10 out-of-state properties). That just doesn't make any sense. So, to all of you that operate and purchase under an LLC - what are your thoughts?

[Bruce Woodruff]

Unfortunately, yes. Otherwise, an accident on one property will open them all to scrutiny and liability. It is recommended to start a 'Holding Company' which will in turn own the LLC's, which own separate properties. Cumbersome it is, but the only other option is to have a huge umbrella policy to CYA. And that idea is only as good as the policy, many have exceptions hidden in them....