A few questions about LLC's

[William Huston]

Hello All, 

I am still trying to learn the ropes, just have a few questions i wanted to ask to get some education on...

I currently have a few rentals, they were previously primary residences that i turned into rentals as i moved among the USA in the military... they are all in my personal name and recently ive learned that im putting myself in a lot of risk having them this way...

My question is do i have to get an LLC in all the states they are located and place them in said LLC of that state or can i just get an LLC in x state and put all of them in that LLC?

Example: 1 property in Florida, 1 property in Colorado, 1 property in Arizona...

Do i have to get 3 LLC's, 1 LLC for each state the property in or....

Can i just get like 1 LLC in Colorado, then put all 3 in that LLC?

[Scott Smith]

Hi @William Huston. Attorney here. Let me see if I can shed some light on your questions. First, I'll go ahead and confirm that having rental property in your own name is a fast track to Lawsuit City. You're smart to be looking at entity options. Litigation nightmares happen more often than you think to perfectly honest investors--and most of them are preventable. 

One LLC can own property in multiple states. However, pooling three properties (to borrow from your example) inside of one LLC means all could be on the line if that LLC is sued. Generally, we want to have one property per LLC for the best possible asset protection. For that reason, I'm a big fan of using the Series LLC as an asset holding company. You can read more about the Series LLC and how it compares to Traditional LLCs here.

Bottom line: your location and the location of the properties doesn't make a difference in what type of entity you can have. For example, I have many clients who form Texas LLCs/SLLCs who have never set foot in Texas. Considering which entity will serve you best is a great start.