One LLC or Multiple LLC's

[Rick Santasiere]

My attorney advised me several years ago to set up LLC's for each one of my rental properties to limit my liability in the event of being sued for any reason. It made sense to me that basically the tenant can only go after the "asset" within that one LLC (or that one property), as opposed to coming after my personal assets inside my family (ie. my home, cars, retirement accounts, etc..)

One concern I have is that every time I do this it costs $200 or so to set it up, then I need all separate bank accounts, followed with with a fee for $250 each every two years for business entity tax. While I do not have a huge portfolio (and consider myself to be fairly inexperienced in the gran scheme), I do hold 6 properties. At $250 each, it's a pretty big hit. Does one LLC having all properties rolled up underneath make sense, or would this increase my liability for being sued for ALL the assets under the LLC?

Does anyone have this experience?  Are there pro's / con's to each?  I want to decrease my expenses for sure, but also want to limit my exposure just in case something happens down he road at one of the props.  Thank you in advance BP colleagues for your knowledge, experience, and of course your time in assisting me make better decisions for my business in the years to come.

Rick

[Steve Perkins]

@Rick Santasiere

This is purely a question of how comfortable you are with risk.  If you don't care at all, then why not own them all in your own name and minimally insure them?  If you want to insure against any risk, then put them all in LLCs and use land trusts to hide names, and buy significant insurance against any possible risk.  This will cost a fortune and you'll use up all your rental income and then some.

The point is that there is a happy medium somewhere in there, and nobody can tell you what's right for you.  You have to consider what level of risk you are comfortable with and implement a strategy accordingly.