Is this the proper way to run a portfolio with multiple LLC's?

[John S.]

Hello everyone,

I'm a single investor with no partners.

I started by placing my 1st rental property into an LLC (for this example, *JOHN SMITH PROPERTY INVESTMENT, LLC*).

I just purchased a 2nd rental property last week with this same LLC.

These 2 rental properties have total equity of about ~$1.5M (both are owned outright). Property 1 = $750k; Property 2 = $700k.

I told my RE lawyer this and he said that I should really have each property in it's own LLC, since if something goes down at Property 1 and I get sued, they can not only go after the equity in Property 1, but also that in Property 2. I have insurance either way, but he said it's still best to split them up, with each having their own LLC.

My plan is to create a new LLC for each one:

-123 MAIN ST, LLC

-123 GREEN ST, LLC

...and then use my original LLC as the "Holdings Company", which then owns those 2 LLC's, and any additional properties I acquire.

As of now, I have 1 business credit card and 1 business account for *JOHN SMITH PROPERTY INVESTMENT, LLC* -- this makes things easy from a bookkeeping standpoint.

I've started doing some renovations on each property and have so far just ran everything through the 1 business credit card and business bank account -- keeping track of all of my invoices, etc.

Even after I split up the properties into their own LLC's, is it safe to continue doing things this way? I can't imagine it making sense down the line once I have say 20 properties and 20 LLC's, to have a stack of 20 credit cards that I'm juggling.

As long as I keep track of what expenses belong to which LLC, is it safe to continue running all of the payments and credit cards through the holdings company and then just divvy it up during tax time?

Will this expose me to liability?