What all do you put in your LLC?

[Derek Scott]

We have an established LLC in South Carolina. For tax purposes, we intend it to be disregarded entity. We will be purchasing at least two SFHs in the LLC soon. We're going to BRRRR the two houses and keep them for rentals. We will do a good bit of the work ourselves.

Up until now, we've had one SFH that we maintain and lease ourselves.

We have a number of tools and some equipment that we use to maintain and repair the current property and will be used to rehab the two new properties. Does it make any sense to put these into the LLC? Is this done with a bill of sale?

Also, does it make any sense to have the LLC manage the property that we own in our own names? I realize that we could put the property into the LLC but there is a mortgage with a due on sale clause (which is a topic with about 2 gazillion threads devoted to it).

For properties in the LLC, do you have the LLC on the lease? I would assume so sense rent should be collected into the LLC's bank account.

And yes, I have an attorney.  But I'm DIY to a fault.  I don't meet with professionals without coming with my own ideas.  I'm an engineer so I'm like that.

Thanks for your input!!

[Mike S.]

With only one or two properties it is maybe overkill, and you will get probably a lot of opposite opinions in this forum, but for long term buy and hold, I am in the camp of having one LLC per property (of enough value) and one C corp as a management company. The management company is collecting the rent under an operating agreement with your LLCs. Your C corp is used for most tax write off of expenses, medical benefit and other fringe benefits. You can also consider using it to fund a qualified retirement plan. The gain are passed through your LLCs.

If you do some flips, you can add an S corp entity for them.

Also by separating the operation from the ownership you divide the liability risks.

South Carolina LLC statutes are not very asset protection friendly, and it may be better to use a SC Limited Partership instead, however that would create limitations on the passive loss. I would suggest looking at having these SC LLCs owned by a holding WY LLC. It would give you a layer of anonymity and add outside liability protection.

For putting assets in the LLC you just do an assignment that will be your contributions to the LLC. You are not selling your tools to your LLC, you are contributing them to its capital.

On the lease, your property management company would be the landlord (unless your State requires to put the owner on the lease).