Multiple LLCs, Multiple Properties, Multiple Bank Accounts?

[Antonio Cucciniello]

Hey All! So I have bought my first 3 properties in the last year all with partnerships and different loan structures. I am looking for help making sure everything is in line and I have gotten the process down so I can continue to repeat buying more with different partners.

Property 1: Purchased with a 25% down mortgage under my name. But the down payment money came 50% me, 25% my dad, 25% my brother. We created an LLP for this. But the mortgage and title are under my name. Bank accounts are all three of our names.

Property 2: Purchased with from a Cash out refinance on my dad's primary residence. Title is under an LLC, with me 50% my dad is 50%. Bank accounts are shared under our personal names.

Property 3: Purchased with remaining money in Cash out refinance on my dad's primary residence. Title is under the same LLC from property 2, with me 50% my dad is 50%. Bank accounts are shared under our personal names.

Questions I have been searching the answers to:

1. For Property 1, do I have to change the title/mortgage under the LLP? If so, how do I do that? Do I need to make sure all the bank account work is done through one that is owned by the LLP.

2. For Property 2, Do I need to make sure all the bank account work is done through the LLC? Instead of our personal names?

3. For Property 3, should I get a new LLC to separate the ownership from the second one?

4. For Property 4, should I get a new bank account so all the work is done with the LLC?

Thank you so much, I appreciate you taking the time to read this, I need help!

[Greg Scott]

I'm not a lawyer or CPA but can share some ideas.  Given the complexities you have here, it is probably worth a few bucks to sit down with your CPA and your lawyer to hash out the issues.

1) Since the mortgages are in your name, I assume you got conventional (Fannie) mortgages. You cannot put a conventional mortgages in an LLC. You can move the title into the LLC but then risk the due-on-sale clause

2) When you are using your personal bank accounts for managing your LLCs, you are "co-mingling funds". If you get in a lawsuit, a good lawyer can argue that you have not maintained the LLCs properly and they will be disregarded. In other words, the way you have this set up is effectively like not having an LLC at all while believing you have the protection of an LLC. It is the worst of both worlds.

3) Financially, owning 50/50 of Property A and B is the same as owning 50/50 of an LLC that owns Property A and B. So, you could create a new LLC but you may not need to unless there is some estate planning or other personal legal reason driving that.

4) I always had unique bank accounts for each LLC. It is the easiest way to show you are maintaining the entity (along with all the other corporate formalities you should be doing each year). On the other hand, I owned most of my SF properties by myself so actually stopped using LLCs for holding the properties and simply got a fortress of insurance, which was far easier to manage. With the more complex arrangements you have, you need some formal agreement to show ownership percentages.