Multiple LLC naming..?

Question

For those who have made individual LLCs for each of their rental properties, have you adopted or recommend a particular naming convention?  Address/Street Number, LLC, etc.?  I am curious.  Thanks!

Dave

Terrell Garren · Answer

24 SFHs, 1 LLC, 1 checking account, 1 spreadsheet, 1 commercial policy, 1 old pick up truck, 1 mobile phone. It does not have to be complex.

Nathan Gesner · Answer

Be careful you're not creating unnecessary levels of complexity, work, and expense. Each LLC costs money to set up and maintain. Separate bank accounts, bookkeeping, annual filings, taxes, etc. To what end?

Most experts recommend a separate LLC for every $1 million in assets. If you're trying to protect your assets, you could easily obtain umbrella insurance for $2 million without all the hassle. And why do you suppose umbrella insurance is so cheap? Because insurers know the odds of you ever dipping into it is almost nil. It's easy money for them.

I have four LLCs, but one is for my real estate business (sales, property management), one is for a storage facility (which is also a business), and then one for commercial investments and one for residential investments. I primarily put my investments in an LLC because I'm in a small town and want anonymity.

I would appreciate any attorneys chiming in on the insurance piece. The majority of claims against Landlords are for security deposit disputes. Even if you lose, you could probably cover it out-of-pocket. The big-ticket claims are for personal injury, but even those are low-risk. Did you know that over 90% of personal injury claims (across all sectors, not just real estate) are settled outside of court? Did you know that 90% of the cases actually tried in court are lost? That means there's a 1% chance of of you ever losing a personal injury claim . . . if one is ever filed against you.

Insurance companies know the odds and will ensure you have enough coverage. As long as you obey the law, take care of your property, and treat people honestly/fairly, you have nothing to worry about.

• Over 90% of lawsuits are settled outside of court and insurance covers them
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Peter Tverdov · Answer

I cannot imagine creating so many LLCs. I have a few but they are for actual businesses. There is so much complexity for each LLC it just eats into your profit and is easily avoidable IMO.

Will Gaston · Answer

@Terrell Garren I wish I could upvote your post 100 times.

I'm ruthlessly seeking out simplicity in my business and life. If it's going to add complexity, I'm not interested.

David C. · Answer

Agreed that it may be a little more work in regards to credit cards, bank accounts but not for the others in my situation, the main reason is that all of my LLCs to date have been formed as *disregarded entities* (i.e. no need for minutes, meetings and all income is simply placed on our 1040).

I really hope that all of us would have a .000001% chance of getting sued.  Remember, anyone can sue for any reason(even if it makes no sense).  The question is, will they collect.....

Nathan Gesner · Answer

If you continue to grow and have 20 rentals, that's 20 different LLC names, Tax ID numbers, bank accounts, credit cards, annual minutes, tax filings, etc. All because there's less than a .000001% chance that you'll be sued for so much that your $300,000 insurance policy and equity in the property won't be able to cover the loss. You're going to be so busy keeping track of things that you won't have time to keep up on the law and ensure compliance, putting you at greater risk.

Different strokes for different folks!

Mark Shaver · Answer

Teaser: "700 naming schemes for rental properties and why it is necessary". ==

Options for using property nickname

David, in addition to using real estate naming for LLCs, you can
      use a property nickname for many other purposes:

• Handymans will be eager to name properties not by their mailing address, but by using property nickname
• The help desk can list the property in the CRM by its property nickname. (This is especially handy when the property is a short-term rental and doesn't have a permanent tenant)
• Tenants may also prefer to contact the help desk under property nickname
• ...

Floral real estate naming scheme

One popular naming scheme uses flower names. In addition to the property nickname, the floral scheme provides a flower avatar:

Image via the article "300 Flower Names and Types with Pictures"

AI REI Naming

I programmed a small artificial intelligence. I fed the program information about thousands of flowers for the purpose of machine learning. The program learned to convert any name into a consonant flower name. Additionally, the program picks up a picture of the flower.

Examples of converting the names of the discussants on this page into flower names.

@Cody Lewis, Lewis => Lewisia:

@Eric Goldman, Goldman => Goniolimon:

@Nathan G., Nathan => Nuphar:

@Scott M. , Scott => Schotia:

Mark Shaver, Shaver => Schefflera:

@Terrell Garren , Garren => Gardenia:

@Will Gaston , Gaston => Gasteria:

700 naming schemes

David, I sent you a link to my article "700 Naming Schemes for Rental Real Estate" in the DM.

Cody Lewis · Answer

The street name idea is a good one. It's easy to remember and keep track of them.

David C. · Answer

@Nathan G.  Your points are well taken.  Perhaps it is a matter of preference.  That being said, I would counter with a few differing opinions.  My thoughts are as follows (The reason with ** being my main reason for favoring separate LLCs):

1) I actually prefer separate bank accounts for book-keeping purposes.  It also makes accounting a little tidier for the CPA as well (which means less headache for me every tax season).

2) Setting up the LLC is a relatively small fee in the grand scheme of things.

** 3) Should one ever be caught in a situation where a claim were to exceed your overall insurance coverage, your combined assets within that LLC would be at risk (in your example $1 MM).  I don't know how others feel, but I'd much rather lose $100-200k in assets than a full $1 MM.  I worked hard for that money, dag-nabbit!

Now, I am sure that someone out there is thinking, "Just bump your insurance up even more, get a larger umbrella policy", but then this begs the question, am I now exceeding the cost of just having each property in its own LLC ?

I too would like to see a legal expert chime in if possible regarding the above thoughts as well as those posed by @Nathan G.

Eric Goldman · Answer

being organized is key and what ever helps with that. I find it easier to use less lengthy LLC names.  Street names  are an easy one for a lot of people.  @Scott M. put some good ideas. Pick a name get it set up and buy some real estate!

Multiple LLC naming..?

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