Which LLC structure is the best for multiple SFRs???

Question

Any recommendations here on what the best LLC structure is? I've heard of single LLC, series LLC, LLC with individual land or revokable trusts for each property within an LLC & even an LLC for each property. Everyone seems to have a different opinion on the topic and it's very complicated! Please Help!!

Clint Coons · Answer

The first question I would need you to answer is where are your investments located? It's difficult to make a recommendation without knowing where your investments are located and where you plan to invest. Second, are the properties encumbered? Third, are you in a high-risk profession that increases your personal liability exposure? Setting up multiple land trusts and placing all of your properties into one LLC is not an effective strategy unless the investments are located in Florida.

Michael Plaks · Answer

The best one is to put each property into a separate land trust, with the beneficiary being a multi-member LLC, consisting of an offshore C-corporation general partner and a minimum of 10 revocable trusts as limited partners - per property. Don't spare any costs when your generational wealth is at stake. Almost forgot - each of these entities must have a minimum of 3 separate bank accounts, located in 3 different banks. At least one of these banks must be overseas or in Wyoming. Otherwise, it's commingling funds, and the big bad guys will be hauling off your furniture tomorrow morning. Be safe.

Soh Tanaka · Answer

In general, the more equity you have, the more properties you are planning to buy in the future, the more LLCs/complicated structure you want/need. Starting out with just one LLC is what a lot of people do. That said, you want to talk to your attorney for your final decision.

Joe E. · Answer

Hi @Kathleen D. , might want to connect with @Scott Smith . His team has been helpful.

Ron Todd · Answer

Thanks Cassi! I'm a buy and hold type myself.

Cassi Justiz · Answer

@Ron Todd, This is more specific to you rather than the OP, but one thing to keep in mind is that it seems (at least around here) that lot of commercial lenders don't like series LLCs. We set one up initially but had several commercial bankers tell us that because of the way it is structured, they would not loan to our series LLC. We could hold property in the series, but in order to get funding we would have to create a separate LLC for purchasing/funding. If you are just buying to hold, it's not a big issue but for funding purposes most of the lenders I talked to preferred just a regular LLC. @Kathleen D. It's really going to depend on what you are trying to protect. You got some good advice already. There are pros and cons to each of the different LLC structures and the benefits of each would be specific to your goal. I would definitely sit down with a CPA and a real estate attorney to discuss your goals and figure out which structure would be best for your situation.

Ron Todd · Answer

Every state has different rules but what I plan on doing (in Oklahoma) is creating a series LLC and splitting my properties into separate LLCs under that. I've always heard to avoid putting multiple properties into one LLC because you can lose all the assets in that LLC vs losing just one asset if you have your homes in separate LLCs.

Jenna Forti · Answer

@Kathleen D.Hi Kathleen,Keep in mind the option of Transfer On Death Deed, which is about $200 to draft and avoids the need for trusts. Ask an attorney about this tool available to you! Best of luck.

Sean Morrison · Answer

I think land trusts are very often misunderstood. They can provide some modicum of anonymity, and are great tools for estate planning, but they aren't designed for asset protection. Using multiple LLCs is a great way to segregate the properties from one liability spilling over and having you lose other properties. But they only protect you after your insurance has reached its cap. So if you have great insurance, you may never need the LLC. That's why you're hearing so many answers on this. How much liability do you expect? How much risk are you willing to accept? And how much are you willing to spend on managing the risk that remains? These are the things you'll want to discuss sitting down with an attorney.

Kathleen D. · Answer

Just have my few rentals right now. I've been talking to NCH who recommends doing one LLC with individual land trusts for each property within an LLC. It may seem to be more complicated than I need right now, and I don't know how much more protection it gives me between the properties. Any thoughts on this vs doing just one LLC for all properties? I plan to buy at least 4 more rentals this year.