Placing Each Property Into Seperate LLC's
Hi all, Thanks in advance for your replies!
my question is this:
What are the benefits and drawbacks to placing each of your properties into seperate LLC's?
And why this versus the standard "holding and operating entities" structure?
Thanks,
-New Guy-
Hi, just came from a lawyers office about this exact subject......He said that the advantage of one property per LLC. would be to limit the losses to that one LLC if a problem arose. That would protect the other properties and the parent LLC. hope this helps
I am reading a lot and talking to people regarding this.
What I am in the middle of doing is setting up 2 seperate LLCs. One is going to hold a property that I am in partners with my father (6 Unit) and the second LLC is going to hold the other properties that I have with my wife.
It was explained to me that until the properties have large amounts of equity keep them together. Then start to break them out.
One other deciding factor for me was that we have commercial type isurance which requires a min. of 5 units. Thus a 6 unit qualifies for its own policy and the other LLC which has a 2-3 units and 1-2unit meets the requirements.
I would appreciate any feed back on what I have stated.
The benefit of forming an LLC is so that in the event of a successful lawsuit against one LLC, they can only go after the assets that are held in that LLC (not personal assets, not other assets held in other LLC's)
It's up to you to decide how much risk you want to take on. The downside to multiple LLC's is minimal. Extra paperwork and extra tax filings at the end of the year.
The insurance should not be an issue. They're insuring the property. They don't really care how it's held or who the beneficiary is.
This is where you, your attorney, and your accountant have to figure out where your risk tollerance is at.
I usually advise as above. If you've got 3 or 4 properties - each of which is 3 or 4 units - hold in one LLC for ease of administration until you've got some equity, then seperate into different single asset entities.
Is there any benefit to deeding your properties to a Trust after you've purchased them in an LLC?
I was thinking of creating an S-corp and putting my llc's under the s-corp would this work?