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Updated over 7 years ago on . Most recent reply presented by

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Brian Garrett
  • Real Estate Investor
  • Palm Beach County, FL
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Separate LLC for each property?

Brian Garrett
  • Real Estate Investor
  • Palm Beach County, FL
Posted

I often hear investors say they have each of their rental properties under it's own LLC.

Does that mean the people who have hundreds of rental units also have hundreds of LLC's?

Or is there a better structure that is typically used once you scale to a certain point?

Do you suggest putting each individual rental in a separate LLC or having multiple properties under one?

Lastly what about flips?  Due to the capital gains I know it's more tax advantageous to elect the S-Corp tax structure.

I'm assuming you wouldn't want to have a flip under the same LLC as a rental since they should be taxed differently.

Should I set up one LLC (elected to be taxed as an S-Corp) strictly for my flips and separate LLC's for each rental?

I'd like to keep things streamlined and simple so I'm trying to figure out the best approach here.

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Nicole A.
  • Rental Property Investor
  • Baltimore County Maryland and Tampa Florida
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Nicole A.
  • Rental Property Investor
  • Baltimore County Maryland and Tampa Florida
ModeratorReplied

I can only speak to properties that you hold as I have never done a flip. This is an age-old debate you'll see tons of threads on this website alone about one LLC per property vs not.

I'm in the camp of not doing a LLC for every single property. But I am for a LLC for each *state* you own property in. Or perhaps, have a value cap on each LLC. For example, once you have $500,000 or $1M (or whatever) amount in assets, then you form another LLC. 

A LLC per property will make for a ton of extra work and fees. You'll have to have bank accounts for each LLC, pay the fees for each LLC, tax returns for each one, and everything else that goes with running and organizing a LLC magnified.

Especially when just starting out, one will not likely have a lot of equity. So it's a bit of an overkill to separate each and every property.

That's my opinion.

  • Nicole A.
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