CPA's: 1 LLC, Multiple, or DBA's under 1 LLC?

Question

I plan on breaking into the real estate industry with rental properties. I hope to acquire multiple properties. Doing so, I'd like to know what is the best way to go about registering these properties.

Should I:

- Register all my properties under a single LLC

- Have an LLC for each property.

- Establish just one LLC then put each property as a DBA

And if possible, please explain why this would be the best option.

Costin I. · Answer

@Justin A Edmonds - neither. You have yet to break into rental properties and to have some equity and/or cashflow to protect with LLCs. Concentrate on getting that first - a few deals under your belt, build some equity and cashflow past your risk threshold, build some wealth - before you complicate your life with the expenses and maintenance of LLCs.

Ryan Proffit · Answer

@Justin A Edmonds I suggest you look up bigger pockets episode 109 with Scott Smith. I think it will give you the answers you seek.

Costin I. · Answer

Yes. Have something to protect, prior to worrying about how to protect. Those LLCs do not come free of expense and effort - that money, time and effort will be better spent at this time in acquiring and building wealth. There might be situations where you would want that LLC protection first, but even then it's because you have already some other personal wealth to protect prior to getting exposed to additional risks from rentals.

Caleb Heimsoth · Answer

@Justin A Edmonds what a headache to maintain all of that.  Your attorney or cpa will love you though for all the fees you pay them.

If you’re worth 10-15M one day I’d say worry about this stuff but if that’s not the case, don’t worry about it

Michael Plaks · Answer

@Justin A Edmonds

The absolute minimum that you need is:

• Separate bank account designated for the business income and expenses
• Umbrella insurance policy
• EIN - an IRS-issued tax ID for the business

Everything else is optional and can grow as complicated as you allow it. It would depend on many factors, including:

• how much equity do you have in your properties
• how large is your portfolio
• how much assets do you have overall
• what is your risk exposure
• what is your risk tolerance
• do you have partners
• do you have helpers
• where do you live and invest (state law varies)

I agree with @Costin I.: focus on building your portfolio before worrying about your entity structures

Justin A Edmonds · Answer

@Ola Dantis thank you for the consensus. Seems that the professionals agree upon the same thing. Im going to do just that. Retain about 3-5 properties then see what I should do.

Justin A Edmonds · Answer

@Costin I. Thank you. So you are saying, acquire wealth that needs top be protected prior to actually protecting anything?

Ola Dantis · Answer

@Justin A Edmonds Hey Justin, I would say that this is a fair question.

That said, you definitely don't want to be bogged down by the technicalities at this point in your journey.

I think start buying some properties and maybe do a touch base after 3 deals to see where you are...

Rich Griffiths · Answer

@Justin A Edmonds as other have said, no need to start with an LLC. First work on building your net worth. As far as banking goes, open a new checking account for each property and don't co-mingle the funds with your personal account. It will make life a lot easier come tax time.

Christina Tyler · Answer

Justin,

It is prudent to have an operating account setup for each rental, at least in the beginning.  Keep your personal funds separate.   We typically recommend having a separate account for each property initially and up to a certain number of properties.Christina

CPA's: 1 LLC, Multiple, or DBA's under 1 LLC?

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