LLC PERMITS AND LICENSES IN FRESNO CALIFORNIA

[Edith Alvarado de Cortez]

Hello everyone!

I'm wondering if an LLC that's gonna hold rentals and do some flips needs specific permits and licenses here in Fresno CA. I know that it's better to set an LLC for every rental property, considering that the main purpose is asset protection, but I also read that you could have more than one under the same LLC as long as they have low equity. Since here in California is so expensive to conduct business I would like to start with just one LLC and, once the equity starts to grow, set them in separate ones.

Thank you so much in advance, and please stay safe!

[David M.]

@Edith Alvarado de Cortez

While I don't know California, you want to keep your short term investments, or flips, separate from your long term investments, ie rentals. It's for asset protection. Your flips are "generating" lots of potential liability including after they are sold. So, no point mixing that up with your long term assets. So if you are doing both, then you need two LLC min.

Since California is so expensive to operate a LLC, why not skip the LLC for the long term rentals? Just get insurance and an umbrella policy? Have you read some of the many opinions/advices?

If you are seriously concerned about liability on the other hand, consider having one LLC do the rehab. This LLC would hold any licenses, registrations, commercial liability insurance, etc. Then, have another LLC take Title to the properties to be flipped. You would own each LLC. Basically, if the property every got sued or had a problem, it wouldn't tie up your rehab operations. Furthermore, if the LLC holding Title has done a lot of flips, you could fold that up and start a new LLC wirh no historical liability. If somebody wanted to bring a lawsuit on one of your older properties, there would be nothing to go after since that LLC is closed and has so assets.

Good luck