Business Structure for Multiple STRs

[Nathan W.]

For those of you who own more than one STR. How do you have it structured?

I see a lot of discussions about placing properites in an LLC, but the discussion tends to end there. When I look at Airbnb profiles, I often see owners that managed those properties under their own name. "Joe" is the host and also hosts 5 other properties. Isn't that risky from a liablity standpoint? When people sue they often sue the property and the property manager. If the property manger is the owner of that property it seems like he puts that property and all his or her other properties at risk.

I'm trying to create a structure that will provide me with a reasonable amount protection without being a nightmare to manage. After listening to some podcasts on the subject (BP Rookie 105 for example), it seems like something like this would provide the best protection. 

The management company would basically be "hired" to run the properties but wouldn't actually own anything.  Funds would go through the management company, to the property (pay bills) then go to the investment company which is where I would gain my paycheck. 
Of course I also have an umbrella policy and each LLC would have its own liability coverage.

Am I making this to complicated? I would love to hear how you guys have set up your businesses. 

Thanks.

Last, to respond to some comments that I know are coming.
- Yes, I understand that a forum is not the best place to get legal advice.
- Yes, I have an appointment with a Lawyer on Tuesday so I'm not just relying solely on this thread.
- Yes, I do know how to use the search function, but I still haven't found what I'm looking for (♫ U2)
- Yes, I overthink everything... that's just who I am.

[Edwin Epperson]

@Nathan W. I 1000% agree with @Alex Talcott, series LLC's make it VERY attractive from an ownership standpoint, but you will need to discuss with the attorney how that relates to asset protection. I would also say, just because the STR is being listed by an individual, DOES NOT mean that is how Title is held. You can personally list all the properties and make it seem that the STR's listed on your AirBnB profile are yours, but legally speaking it all boils down to who is on Title. Several professionals, I would recommend that you discuss your idea and structure with

- Corporate Attorney (which your doing and kudos to you for taking that step to arrange before posting on BP about it)
- Property Insurance agent.  This will be critical, because you don't want too complicated a process that the insurance companies overcharge you (not sure if this could be an issue but it strikes me as a possibility)
- Lender. Unless you plan on buying all cash, and never touching the equity, or if you have a broad base of private money (not private lenders, there is a difference) then you will need to understand the lenders' requirements for STR's, and more importantly how they will expect to have title held so that they are protected. Having a preferred lender involved in your conversation, especially when talking with the attorney will save you ALOT of back and forth between parties, thus increasing unnecessary costs.

Personally, I do not see you overcomplicating things, you are doing your best to be well educated and approaching your venture with eyes wide open. It took me over FOUR years of studying and sitting under mentorship before I made my first real estate investment deal as a lender. I actually made that loan while deployed to Afghanistan on the side of a mountain, to an RE Investor in Pensacola, FL. So while everyone bangs on the "Time is short act NOW" drum, you continue to shore up your knowledge and confidence. I believe the previous three mentioned professionals will help answer any and all questions that you may have concerning your structure as well how to best proceed. Best wishes and much success. I've attached a PNG file that may better explain my thoughts. You basically have the idea down, yet you may want to have the Management company NOT owned by the owing entity as well you may want to structure the ownership entity as a Corp, so that you can #1: collect a W2 #2: contribute to a solo 401K #3: Run more personal expenses through the entity for tax write off options such as health ins. and other insurances. As a side note this Ownership Corp could easily be replaced with an LLC taxed as an S-Corp, but you will have to consult your CPA about that as well.