How many properties per LLC?

[Kenneth A Morris]

How many properties should be kept in an LLC from the perspective of asset protection? Will it provide any more protection for my properties if I open multiple llc's and only keep a few properties in each llc's name?

[Scott Smith]

You just need to recognize that if there is an issue with any property in the LLC, then essentially all the properties are part of the "pot" if there is a judgment - the liability attaches to them all. So it's about deciding how much it is worth to you in time and money to separate those out, though there are strategies that can reduce the costs.

As Costin explained above, there are many factors that can play into the "ideal" setup. I often break it down into the "four pillars" of protecting your assets. The first pillar is a good insurance policy as that cover the majority of your exposure. However, it only protects you from one type of liability: accidents.

After that you want to compartmentalize your assets, which is often accomplished through the use of LLCs or corporations. I personally find the Series LLC to be a great tool for the individual investor who is planning to expand their operation, as it allows for you to scale infinitely - check out this article to learn more. The third pillar is somewhat similar - you want to separate your operations from your assets. That means you establish a Traditional LLC to carry out the operations of your investments, in order to separate the liability from your assets, including: paying property management, paying contractors, collecting rent, marketing, etc. Finally, with the use of Trusts while establishing these structures you can add a level of anonymity by removing your name from public record.

As your investments scale, your strategy should scale with the investments. The Series LLC is an amazing tool in that regard because you don't have to go through the headache of establishing new LLC's each time you purchase a property. Due to the ability to scale so easily with the Series LLC it is really simple to keep everything separated.

This isn't legal advice, simply my opinion as an investor.