Multiple LLCs vs LLC and land trusts

[Andrea Kugelman]

I spoke with my lawyer and my CPA today and they both have different suggestions.

I own a few buy-and-hold and will be managing rental properties for others as well. 

My lawyer suggests 1 LLC with the properties in it and a second LLC for the management company.

My CPA suggests land trusts with the LLC as the beneficiary and trustee for the properties and manage the properties (even those not mine) under the same LLC.

How do I know what is best to do? I am looking for legal protection and asset protection. What type of insurance do I need for each of these scenarios?

[David P.]

@Andrea Kugelman the umbrella policy is good to protect against damages to the property, however for your property management company, you should consider Errors and Omissions Insurance policy to cover any issues that result from doing business and acting as "Manager" with other tenants.

I had tenants pay the months rent; however the landscaper noticed the property was empty and I let the management company know the place was empty.  They posted all the correct signs and notices, and according to the management company they didn't respond and they took back possession of the property by changing the locks. Low and behold the tenants moved stuff back in and the management company disposed of everything.  After clean-up and getting the place ready to rent; I received a summons to pay for all of the stuff that was removed from the property including the deposit.  

After several months of paying a lawyer over $5K and a ruling from a Justice of the Peace I was to pay for their stuff including their legal fees of another $5K.  Our lawyers are now perusing the management company for our cost, however the only people that are truly winning are the lawyers.

Good luck, and please remember to VOTE on reply's you think have helped. This validates respondents posting and lets readers know that this information was valued.

Hope you have an excellent future!

- Dave