Comingling funds with LLC

[Kyle Nigro]

Hi everyone,

This year I purchased my 2nd and 3rd rental properties in the STL area. I had a SFH in the area already, which is under an LLC. I have not created an LLC for the other two properties.

I have been collecting the rent from all my properties and putting it in the LLC account. Is this ok? Should I make a 2nd and 3rd LLC? Or should I put all the properties under the same LLC?

Not sure if there are any disadvantages or concerns I should have about doing this.

Thanks,

Kyle

[Megan Templeton]

Hi there - there are a few components to this. The first is that if you are going to use an LLC account for properties that are not titled to the LLC, you need to have contracts in place to use the LLC accounts for the properties - these would be akin to a property management agreement. I would also recommend putting the 2 other properties in LLCs for liability protection and tax benefits. I dont recommend grouping properties together in one LLC because it comingles liabilities between the properties putting them all at risk. I would recommend one LLC per property or using something like a series LLC where you can place the properties into individual child cells to minimie liability. . A strong alternative (although a slightly more complex set up) is to have an LLC for each property or a series LLC (a holding LLC) and one LLC to manage the property (the would be a shell LLC that never holds assets and is only used for public facing activities like interacting with tenants. The dual LLC set up is useful because if a tenant or third party were to sue, they would sue the operations LLC that doesn't own anything so there would be nothing to recover.