Asset Protection for Rental Properties

[M Amin]

If you own several rental apartment buildings. Which is better way to legally structure the properties for protecting assets against tenant lawsuits.

Scenarion#1:

Have each property in its own series under Series LLC. Use Series LLC to handle management activities, including collecting rent and signing leases.

Scenarion#2:

Have each property is in its own series under Series LLC. Create a separate "operating" LLC to handle management activities, including collecting rent and signing leases. The operating LLC doesn't own any asset, just liquid cash that is rental income from tenant and expenses against rental properties. Could the shared management function create a "common enterprise" argument that might compromise the intended separation between series?

Is there a alternate way to structure it, please suggest.

[Mitchell Zoll]

You are looking at it wrong.  The best way to avoid lawsuits isn't in the entity structure, it is in the way you operate the property. First place to start is your state and local property codes/statutes. Then have a lawyer review those statutes with you and review your rental agreements. Then have your insurer review your property to mitigate any risks.  If you start with multiple LLCs and Series LLCs, you might find that those nested and complex entities don't protect you from lawsuits, they just create more defendants.