Are Series LLCs an option in North Carolina?

[Adrienne Bryson]

I'm looking into the available options for a wholesaler, and an out-of-state investor I've been talking to mentioned Series LLC.

From my understanding, rather than establishing a new LLC for each property and then selling the entire LLC to the buyer each time, you can establish one Series LLC and make a new "cell" for each property. Then you can add and remove members from each cell as needed.

But I can't find much information on this and I haven't been able to find any info that's NC specific.  Does anybody know if this is an option here?  Has anybody done this?

[Brian Compton]

Hey @Adrienne Bryson, I would say contact a local attorney.

Here are my thoughts...

If you're just wholesaling, create a single wholesaling entity (LLC). You don't need to create one for each property. As a wholesaler, you never own the property itself. You own the purchase contract for a few weeks before you assign (sell) it to a buyer. You're not selling your LLC. For now, there's no need for more than one LLC. But definitely create one and do business within that so your personal assets are protected.

If and when you get into other investment strategies (buy and hold, for example), then you could branch out and get more complex with your asset protection. Again, don't take this as legal advice, but I think a series LLC is similar to a C-corp. Where you could create a C-corp to manage your LLCs and you own your various properties in your LLCs.

Remember that anything within a single LLC is open to lawsuit against that particular entity. So if you had 5 rentals all in the same price range, maybe you put those into the same LLC. Then if you have a 10 unit apartment complex, put that into its own LLC. If you put every single property into the same LLC, if someone comes after you for one, they could take them all. So that's where having multiple LLCs can provide that added layer of protection.

I hope that helps. And I hope that's accurate! That's my understanding of how it works.