How Many LLCs Do I Need?
Repost in Legal forum
My situation is that I have 3 rental properties with alot of equity I don't want to take out equity because I want to pay them off and hold them for income later
I am in the process of putting each one in a land trust and I want to assign them to my LLC that I am also forming.
Since practically my total worth is in the equity of these houses,
I think I should put each house in a separate LLC?
Any thoughts on refinancing to get the equity out and THEN put them in a LLC all together?
[remember I really wanted to pay them off]
Any suggestions?
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cataylor98
Newbie
Lyn,
I can give you some general guidance on what I've learned over the last few years (not to be constured as legal advice!)
Often times properties are grouped by risk. One in a "not so great" part of town would be in a seperate LLC from others that are relatively risk free. Or if one property has riskier tenants by nature of the property, it could all be walled off from the others. Other owners have a number such as "4" in each LLC, completely dependent on comfort. I'm sure you know this already.
My own guiding principle is to group by comfort level. If you want to protect yourself as much as possible, go ahead and put them in seperate LLCs. If you don't mind paying for the additional annual fees and accounting cost etc..then do it, especially if you sleep better at night. There is no wrong answer. Just keep in mind it would require a pretty large incident for someone to have a burning desire to get money beyond your normal insurance coverage to make them go after your other assets with multiple court orders, etc. If you've already gone so far as to protect the privacy of ownership with a trust as well, you should be armor plated with multiple LLCs. As long as you sought competent legal advice in the creation of these entities and trusts of course. Some would say that is overkill, but again it all depends on comfort. Bill Bronchik is a good resrouce if you haven't read his material. He's in favor of "more is better", which seems to fit your outlook. I hope it helps.
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Posted: 12:10 on 11-30-2003
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Thank you I wanted to set up this LLC today as I have been putting everything off
I just purchased Bill Bronchick's Book "Wealth Protection Secrets of a Millionaire Real Esate Investor" and have been reading it for 2 days now
I still did not get my answer from his book as he says as you did put the riskier entites in one LLC and less risky in another but if all you have are 3 and that is your worth I was thinking of 2 or 3 LLCs
[ Edited by LynLinz on Date 11/30/2003 ]
My personal decision is to put each property into its own LLC. Each property is unique and has its own potential problems. My attorney charges strictly by the hour and after my first LLC I get charged $50 from the state and $30-40 for the new LLC. Very cheap protection.
For simplistic purposes I also have a property management company that I use to pay for business cards, telephone lines, marketing, etc. You can bill back charges to the other entities if needed. If you manage your own properties you can simply bill the other entities too.
Good luck.[ Edited by myfrogger on Date 12/07/2003 ]
Thanks myfrogger,
Is your management co in a LLC also and do you have an accountant do the billing between entities? Do you know of any good material to learn the bookkeeping part?
[quote]
On 2003-12-07 14:30, myfrogger wrote:
My personal decision is to put each property into its own LLC. Each property is unique and has its own potential problems. My attorney charges strictly by the hour and after my first LLC I get charged $50 from the state and $30-40 for the new LLC. Very cheap protection.
For simplistic purposes I also have a property management company that I use to pay for business cards, telephone lines, marketing, etc. You can bill back charges to the other entities if needed. If you manage your own properties you can simply bill the other entities too.
Thnaks