Mom & Son buy rental properties, need business structure advice

[Aaron Roggensack]

In recent years my Mom (59) and I (36) have been partnering together to make our first moves into real estate investing. In this arrangement she is essentially a silent investor and I manage the properties. To date there has been no formal business established for any of the activity described below. But all profits and costs have been claimed on personal income taxes.

Here are the most relevant facts, followed by my questions...

1) Between the two of us, we own 4 properties:

a) I own (via bank financed mortgage) my primary residence, a condo in Austin, Texas. Mom rents her primary residence, in another state.

b) Mom owns (via bank financed mortgage) an investment condo in Austin, Texas.

I operate this condo as AirBNB rental and retain a percentage of gross income for my management services each month. Remaining funds go into dedicated bank account owned by Mom.

c) Mom and I own (via co-signed bank financed mortgages) two houses in San Antonio, Texas.

Both houses are occupied by renters on year long leases.

I retain a percentage of gross rental income for management services each month. Remaining funds go into dedicated bank account owned by both of us.

2) We plan to both buy more real estate, both independently and together. Intended plan for all properties is to hold and rent them out for the long term.

3) It is somewhat likely that I, or she, may independently both be interested in changing status of certain properties in the future, from investments to primary residences. and vice versa. Both for personal and tax reasons.

4) I am now fielding inquiries to manage AirBNB rentals for others, and considering doing this (in conjunction with income listed above) as full time business.

Questions

A) Should our currently owned rental properties be put into LLC(s) and if so what are the primary reasons? Can strong insurance on the properties work just as well?

B) If you recommend LLC, do you recommend one for all properties or one for each individual property?

C) Will placing the current properties in LLC's have any affect, positively or negatively, toward obtaining more financing for future purchases?

D) Should we start buying properties with only one of us listed on the mortgage/title, to avoid difficulty in future financing (too many mortgages)?

E) What would be the best method/schedule of distributing funds from these LLC's to us as owners?

F) Should I setup an LLC or S Corp for Property Management Business?

G) Are there any concerns with paying My Management Company, for managing properties co-owned by me?

Your expertise and advice is much appreciated. Thank you!