LLC to start, then Series LLC

[Rebecca Miller]

I'm just starting out with real estate investing in Illinois, and have been looking into the advantages of the Series LLC. At this point, I don't have any rental properties, but I am getting close to being at the point where I can get one. My plan is to buy one single family rental or multi family every year or two.

There are some very good discussions on this forum about the Series LLC, and if done right with the advice of a good attorney, I think that this is the route I want to go once I have acquired multiple properties.

My Question:

Since I will be starting out with only one property, would it make more sense to go with just an LLC for the first property, and then when I am in the position to buy a second property, convert it to a Series LLC with two cells?

I've heard it is possible to convert an LLC to a Series LLC, but how easy is this to do? Does this leave a "trail" that would compromise the Series LLC?

[Hattie Dizmond]

You can't "convert" an LLC to a Series LLC, at least not in Texas or Nevada, and I doubt you can do it anywhere else. Why? Because there is specific disclosure language that must be included in the formation filing notifying would be creditors and others that there could be Series involved that are legally separate from the original LLC.

Simply form the LLC as a Series LLC from the beginning. You don't have to form additional Series at the beginning or ever, for that matter, but you have the flexibility to do it as necessary.