Advantages to creating LLCs to do perform duties?

[James Stewart]

Is it advantageous to create LLCs to perform “normal duties”? Examples- Property maintenance, cleaning, remodeling, etc.

[Jo-Ann Lapin]

Everyone has a different situation here . Great that people are waying . Look for some professionals that specialize with real estate investors that can tell what is best. All have pros and cons .

[Greg Dickerson]

Yes. It’s always a good idea to incorporate any business for liability reasons and tax purposes.

[James Johnson]

I have even gone as far as creating a separate LLC for each property for all my holdings in other States outside California. For my holdings in CA I use just one LLC per property, that way my liability is limited to the price of that particular property. For my main LLC, the one that started everything I gave it intertwined with a family trust for an extra level of protection.

[Jo-Ann Lapin]

Everyone has a different situation here . Great that people are waying . Look for some professionals that specialize with real estate investors that can tell what is best. All have pros and cons .

[Mike S.]

As a general rule of asset protection, you want to separate entities owning asset from entities operating the asset as each have different liabilities.

The concept is if you are sued for something that you did (operating), you may loose that entity but there is no asset in it.

It is a strategy used by many restaurants. They even push it further. They have 3 entities. One owns the brand name. One owns the real estate. One is the operating restaurant. If a customer sue for a bad food poisoning or a slip and fall, you may loose the operating entity in the lawsuit. but you can then create a new one the next day but still keeping the same location and same brand name so you won't loose your customer base.

[Scott Smith]

Originally posted by @James Stewart:

Is it advantageous to create LLCs to perform “normal duties”? Examples- Property maintenance, cleaning, remodeling, etc.

 I often break it down into the "four pillars" of protecting your assets. The first pillar is a good insurance policy as that cover the majority of your exposure. However, it only protects you from one type of liability: accidents.

After that you want to compartmentalize your assets, which is often accomplished through the use of LLCs or corporations. I personally find the Series LLC to be a great tool for the individual investor who is planning to expand their operation, as it allows for you to scale infinitely - check out this article to learn more. The third pillar is somewhat similar - you want to separate your operations from your assets. That means you establish a Traditional LLC to carry out the operations of your investments, in order to separate the liability from your assets, including: paying property management, paying contractors, collecting rent, marketing, etc. Finally, with the use of Trusts while establishing these structures you can add a level of anonymity by removing your name from public record.

[James Stewart]

@Greg Dickerson Thank you for your feedback

[James Stewart]

@James Johnson Thank you for your feedback