LLC or Series LLC, Which one? Why?

[Samuel Liapis]

Hello All!

I am going to be starting my BRRRR Strategy soon and I wanted to know how I should go about purchasing the properties. I know I need an LLC for certain financing. But which one should I get?

In order to refinance out of the BRRRR deals I know I can quitclaim if need be but will I need too? Which LLC best protects me legally so I don't lose everything if something goes wrong?

Any help would be amazing! Thank you!

[David Gotsill]

@Samuel Liapis - Good luck with the first BRRRR. I hope it goes well.

Not sure about all of the details of your situation, so it's possible that a Series LLC is just what you need, but I would think it unlikely. As @Jon Reed suggests, a standard LLC is likely a fine choice.  (Note: I am a lawyer (eww), but this is not legal advice.)  Jon aptly notes those certain formalities need to be followed for the benefits of an LLC to be realized.   Since LLC set up and maintenance comes with certain costs, you want to be sure you also get to keep the benefits.

One comment in your post caught my attention - that you "need an LLC for certain financing". What financing is this? Are you already speaking to a lender? If so, you should run your proposed LLC approach by the lender for any comment before you jump in (for example, recently had an Alabama lender that insisted we form a Delaware LLC, even though it was an Alabama property). Additionally, some lenders will refuse to lend to an LLC. That's why you hear about people quit claiming to an LLC - the bank would only loan to the individual (not the LLC).

In short, it's unlikely that any benefit of a Series LLC justifies the additional costs and effort. FWIW, many states don't have yet have established law on treatment of Series LLCs, so in those states there's even a risk the Series all gets rolled into 1 LLC anyways. Remote risk, but depending on your behavior/use it's possible.