How many properties do you have in your LLC?

[Morgan Klein]

Hey BP - My wife and I started investing in real estate a little over two years ago. We currently have 4 SFRs in our portfolio. We both have good careers in sales (not real estate), with a combined 27 years of earning, saving, and cramming our 401k and IRA coffers. So we have a decent stash of personal assets.

This year I moved the properties into an LLC, primarily so I could separate our personal assets from our properties. Since then, we've made a commitment to increase our REI portfolio. Our 5 year plan includes paying off Our current properties and adding 4-5 additional properties. As the value of our portfolio goes up, so does my concern of risk associated with having all the properties in one LLC. So my question is, how much do you think is too much for one LLC? I set up two additional LLCs when I set up the one our properties are in, with the intention of having each property in its own LLC, before deciding I was ok with the risk of having them all in one LLC (and not wanting to deal with the additional paperwork). Any insight is appreciated!

[Thomas S.]

One paid off property in a LLC is one too many. The cash value attracts law suites regardless of how many properties. To take maximum advantage of having a LLC ideally the assets in the LLC must have no value. You may be protecting your personal assets using a LLC, although not likely, but you are setting a target on your investment properties by paying them off. To maximise your protection you should be continually pulling the equity growth out and investing it in something other than real estate outside of a LLC.

Ideally anything inside a LLC should have very little cash value otherwise you undo the value of using the LLC.. The purpose of a LLC is to hide from not attract law suits.