Relationship between a Holding Company LLC and an Operating LLC

[Jeff D.]

Hello fellow BP readers,

I'm currently looking to set up my first LLC's to begin commercial multifamily investing. I've been doing my homework and i've come to the conclusion that it's in my best interest to establish multiple LLC's for asset protection purposes. I've come to understand that I should establish an LLC for purchasing the property, operating it, and for all business dealings and another separate LLC to simply hold the asset. Any LLC I set up will have a single owner LLC structure.

Can someone expand on the relationship between these entities for me? How do I draw money from the property and distribute to myself? If i establish an LLC for each property, doesn't using a holding company for the properties defeat the purpose of separating them, if they end up just getting held under one entity in the end? I plan to consult an attorney to answer my questions, but in the meantime I'd like to walk into that meeting down the road with a clearer understanding of how this strategy works.

Thanks for your help.