Asset Protection: Two Company Structure Questions

[V.G Jason]

Hello,

I have a question about forming LLCs to protect my investment properties that I intend to start doing here shortly. Before someone says, you don't "need" an LLC. I know I don't need one, I do prefer one for anonymity and risk protection. I'm willing to pay the hard lender, DSCR loan route for it to keep myself at bay.

My question is has anyone heard the two company structure of LLCs; one holding LLC that owns the assets, another LLC that is the management of the assets. If so, I have some questions.

If I were to use a property management company, I imagine the mgmt LLC does the negotiating & discussing, but doesn't the paperwork still have to be technically signed by the household owner(holding LLC)? So how does that really give you that extra layer of protection? I am trying to understand how this really divides it.

[Jason Marino]

Hi V.G,

What you are describing by using 2 LLCs is a common method in asset protection and functions fairly well. The idea is to separate the liability of interacting (for example in contracts and Leases) from the liability of owning an asset. What you would do to maintain the anonymity of your Operating Company is have a private contract between your Holding Company and the Operating Company that authorizes it to enter into Leases, contracts, advertise the property, and other actions on behalf of the Holding Company. This would allow the Operating Company to perform these interactions without the Holding Company needing to sign anything that other people would see.