Different Bank Account & LLC for Every Property?

[Steven Cobb]

Hey Everyone,

Do you have a different bank account for every property, or do you have one account that holds all of your funds? I’m assuming if you just have one account that you would need to have a well documented system that tells you how much of your funds are designated for repairs & such on each property?

Also, do you have a separate LLC for each property?

[Frank Chin]

@Steven Cobb

Setting up all these LLC's won't do you any good.

I had S Corp's, LLC and C Corp set up for various businesses with the thought of having corporate shield against litigation. I learned in the final analysis, it's a total mirage.

Bought a business in an LLC from someone in an S Corp. Learned later the S Corp and the S Corp owner was sued for $3 millions dollars. He only had $1 million liability coverage for the S Corp. S Corp owner thought, no problem, I have the corporate shield, had his lawyer file motion to have suit against him dismissed because after all, they should be only suing the S Corp. Wrong!! The court refused to dismissed the suit against him personally as litigants has the grounds to go after him.

I'm a little concerned, check with my attorney and my insurance agent who had me buy liability insurance for myself besides the LLC. Checked with my attorney and he advises people suing small businesses usually sue the owner personally for gross negligence anyway. In that case, if they win the lawsuit, they have claims against his ownership in any LLC you have, whether you have 1 LLC or 100 of them.

I was aware of the progress of the lawsuit as my employees were called down to give depositions about their former owner, who was sued for gross negligence. The plaintiff attorneys was not aware the S Corp owner sold the business, moved from NY to Florida, bought his home with the proceeds and sheltered by the state's homestead laws. In the final analysis, it's not the corporate shield that saved him, but the state's homestead laws. 

The lawsuit was finally settled for $1 million. Had he stayed behind in NY, the lawsuit would have been for $3 million, and had he lost, would be personally out $2 million. He complained to me he was told the insurance company's lawyers only represent the insurance company and he was told he better get lawyers to represent himself personally.

I decided to used my money I saved from not setting up all those LLC's, and instead spend it on buying several million in umbrella liability insurance instead. It's my way of sleeping better.