All Forum Posts by: Adam Burrows

@Carl Stenberg

I just posted a question asking this, and then I came across your post from 10d ago!

What are the consequences of simplifying the entity formation further by creating the Management Co as a child series of the Investment Entity?

I'm considering a Holding-Operating strategy for MF property management in Texas. The proposed entity will be a Texas Series LLC, e.g. ABC Holdings LLC, and each MF property will be its own series (unsure if I will do a registered or protected series yet).

Is there any problem creating the Operating LLC as a series within ABC Holdings LLC? In this approach does it really matter if the Operating and Holding LLCs are completely separate given the protections a Series LLC provides? I expect a property lease agreement between each child series and the operating/management company (also as a child series) is just as sufficient as two separate LLCs making the same property lease agreement.

My only goal is asset protection so I need to know if this approach will immediately "pierce the veil." Thanks in advance!

@Carl Stenberg Thanks for the reply!

Regarding the Holding side of it - what is your experience when it comes to deeding a property to a holding company after close? I like the operating-holding strategy, but the only side of that which is simple is the operating component. My loan officer (I know...) said that people will let title know ahead of time and then complete the deed transfer immediately after closing. I just don't trust that, especially coming from a loan officer.

Appreciate any insight you can provide based on your experience or experience of your clients.

@Luis Alvarez Thanks for the comprehensive explanation! My apologies on taking so long to respond - I decided to abandon the consulting LLC in its entirety as it was completely unnecessary. It's simpler to act as a sole prop for that income stream.

The "comingling" event is a difficult to define concept for me. One transfer of money from a personal account to an account associated with the property and you're toast!? What about owner draws? What if I experienced a net loss for the month and need to supplement the property account with personal money to cover an expense or payment?

I'm currently under contract for my first MF 4 unit property. Before I complete this transaction I want to ensure I set up any required entities correctly. The primary struggle I have is whether I even need an LLC or not. BP has starkly contrasting advice when it comes to entity structuring - and for good reason because there are so many variables to consider.

I'm interested in your advice on entity (or no entity!) architecture for someone who plans to invest aggressively in real estate, specifically 2-4 unit MF properties, and possibly commercial 5+ deals in the future.

Should I just manage a healthy umbrella policy and forgo the entities entirely? Should I use an operating-holding LLC structure where both are owned by a Trust without ownership in each other? I've drawn out a dozen different scenarios and the decision is paralyzing. Since I'm not buying properties in cash (nor willing to accept a commercial rate for a conventional deal) I am doubtful of deeding property to a Holding LLC after close - it seems risky (and wouldn't that pierce the corporate veil already?).

I have a lot to consider, but I just want to ensure I set it up the right way from the beginning. My primary goal is asset protection, followed by simplicity, and a bonus goal of as much anonymity as possible.

Thank you!

I have a Series LLC I use to collect income for my consulting business, but the income goes to my personal checking account. If I created a child series to hold an investment property (not collects rents though, just hold), is the corporate veil already pierced since the Parent LLC collected income for my consulting business? If so, will ceasing the use of this LLC as my source for consulting income remedy any issues as long as investment properties are placed under series after I stop collecting income from the Parent LLC?

My goal is to determine if I can still use this LLC as a holding company while maintaining liability protection. My overall strategy is to minimize the number of entities I create. A simple holding-operating LLC strategy is what I want, where the Holding LLC contains properties organized into series, and the Operating LLC collects rents.

Thanks in advance

@Luis Chug could you share the Frost rep who did this? It's hard to find bankers who have even heard of a series LLC. And was your representative able to open the child series without getting a separate EIN from the parent LLC? I don't want to have to file separate franchise statements. If I require a separate EIN then I would just make regular LLCs. Thanks!