When owning properties should rentals be placed in 1 LLC or more

[Lewis Acosta]

When owning multiple rental properties should all properties be placed in a single LLC or multiple LLC's

Under an anonymous holding company?

What is the best way to avoid loss of properties when it comes to potential threats or law suits?.

[David M.]

@Lewis Acosta

Yup, this is brought nearly daily on BP.  There really isn't a simple answer.  Its up to and your risk tolerance.

First, read about LLC's below. Remember, they only provide limited liability protection, not accounting/tax benefits (unless you are investing with a non-spousal partner).

https://www.biggerpockets.com/...

https://www.biggerpockets.com/...

As mentioned, many investors just use insurance. with or without a LLC, you need a homeowner/landlord policy. Without a LLC, you will need an umbrella insurance policy. If you have a LLC and you want the extra coverage, each LLC will need its own umbrella policy. Remember, its about adding "layers of protection." Also, you want the insurance so that you can let their lawyers fight the lawsuit, otherwise you'll go broke just defedning your LLC.

https://www.biggerpockets.com/...

https://www.biggerpockets.com/...

Then, there is the extra overhead with operating with a LLC. The very first link should address most of it. But, let me highlight financing (which there have been several recent threads started). Legal entities, such as a LLC, are not eligible for conforming residential loans. This means you will have to use commercial financing, i.e. non-residential loans. Many investors get "around this" either knowingly or unknowlingy by transfering Title back to their name, getting the loan, and transferring the Title back to the LLC. As I write about in the below post, this is a bad idea in my layman's opinion. You need to protect your corporate veil by not co-mingling funds or using the LLC as an alter-ego. Lenders don't have a responsibility to protect your corporate veil. Also, most lenders are residential only. So, the only way for them to sell you a loan is to have you transfer Title. But, I don't see this as being in your best interest.

https://www.biggerpockets.com/...

Good luck.