Apparently A Raging Debate
regarding proper structure of owning/operating a number of multis in a number of locations. We've gotten two schools of advice from various sources/lawyers/etc and I'd be interested as to others' feedback/experience since there's nothing like going out and doing it. Imagine you're holding a few hundred units across dozens of buildings in several states:
1. Have one LLC be the property manager that collectes rents and other fees and disburses mortgage payments, etc for all other properties/locations out of that LLC's bank account. What we've heard is pro: same liability profile as more expensive and time consuming segregation of everything...con: pierce the veil easily since members of prop mgt LLC and holding LLCs are same/all payments from all properties are commingled
2. Have each property (or if too costly, put about 15-20 untis worth of properties toegether per LLC) with its own bank account, etc. Don't have a separate 'mgt' LLC. We've heard pro: helps prevent piercing corporate veil, con: very expensive and time consuming to track, etc For example, what if the various locations need paint and carpet jobs after the tenants move out...does each location have a bank account and corporate card, etc?
We (very unfornatunately) must oursource property mgt early on....anyone with thoughts?
Hello again I am having the same problem and bottom line is you split your units into smaller groups and have your book keeeper seperate and log expenses treating each small business group seperately so as not to co mingle funds. That is why it is so crucial that almost all of your property is cash flow pos and not negative. Your team laywer ,cpa, and your book keeper should get together. Other wise if you dont fork out the 5K or whatever it costs it is only a matter of time before some tenant takes you to the cleaners. Robert Kiyosaki gives good advise in the book Protecting your #1 asset.