Creating a LLC just for renting and managing my own property.

[Kevin Lefeuvre]

I have decided so far not to create a LLC for each property, instead using a good insurance. Also because getting loans is complicated in LLC and there are fees for each LLC (just $800 per year franchise tax in California to name one), etc.

But in the interactions with the tenants, for anonymity and some more protection without the above inconveniences, I thought one should be able to create one single LLC for all properties who is tenant facing, managing the properties. My own property management company without the license.

Can I appoint, or give power of attorney to my LLC to represent me vis-a-vis my tenants, lease, collect rent, etc...?

Is there any other legal entity like a DBA which can be used for that purpose?

[Frank Chin]

Originally posted by @Michael Ablan:

@Kevin Lefeuvre -  Having a separate entity act as your property manager is a very good idea, and it's how all the big boys do it.  A properly worded contract can shift all liability to that company in the event of a lawsuit.  And do you know whats good about that?  That company doesn't own any assets and it's only income is 10% of it's managed portfolios gross rents.  There would be nothing for anyone to take.

There is this concept of piercing the corporate veil, and I seen it done with lethal effect.

If the intention is to shift legal liability, the problem is there is a LLC management company, and there is someone in the management company working as the property manager, who may be the principal of the management company. Now, if you hired an outside management company, paid the monthly fees, the PM would have his own E&O insurance. You'll be off the hook.

I bought a business from a couple who operated via an S Corp. They were assured the S Corp would shield them. Then came a $3 million lawsuit, they only had $1 million liability coverage, and the bad news was, the S Corp and they were sued personally. They tried to get the personal part dismissed, it was turned down, and proceeded to trial that way, with them personally and the S Corp.

I followed the case, as my employees were called in for depositions, and they ask about how active the owner is, and was told he was there every day running the business. Fortunately, they moved to FL, and put most of the proceeds into their home there, and due to FL homestead laws, can't be touched, so the plaintiffs settled for the $1 million.

Spoke to lawyers, he actually had a manager on the payroll, had he stayed home and slept, things would be different. The corporate shield didn't protect them, FL homestead laws did.