How Many Properties in an LLC

How Many Properties in an LLC


Hi Lee Phillips here. Welcome to my
YouTube channel. I’m an attorney and I want to talk about a question
that I get quite often. The Guru’s tell you that you should put each one of your real estate investment properties in a different LLC and is that good? Yeah, that’s good from
an asset protection standpoint no question that it’s better to have one
egg in each one of your baskets instead of a bunch of eggs in one basket basically the concept. However, you can’t manage the paperwork associated with six trillion LLC’s. If you’ve got twenty properties and you’ve got a separate LLC
for each property you’re gonna drown in your own paperwork now the lawyers
they’ll love to do that for you because they get to then charge you for 20 LLC’s Great deal, right? Yeah, if you’re the lawyer. Well, you’ve got to get a tax ID number
you’ve got a file a tax return you’ve got to do the paperwork with the
state and pay the fees and if you’re in one of those “foreign” countries like
New York and New Jersey and California then you’re paying a lot of money for one of your
LLC’s every year in the state fees. So these all add up. If you’ve got twenty California LLC’s,
you’re looking at, what? Like $17,000-18,000
in legal, in state fees every year. You can’t do that. But in addition to that you can’t do the paperwork you just drown in your own paperwork. So what I suggest is is that you make a logical division of your properties and create a basket to hold those kind of properties create another basket to hold a different type If I’ve got three single family rental units and
one apartment fine, let’s put the apartment in one LLC
and the three single families in another or if I’ve got some high-end single families,
let’s put those in one and if I’ve got a bunch of Section 8 low-end stuff
let’s put them in another one. Divide up logically. If I’ve got some properties in Ohio
and some properties in Florida let’s have one in Florida and one in Ohio by the way refer to the YouTube on where do you put your LLC, which state you put it in you’re gonna have to have an LLC that’s in Ohio
that registers in Florida or you’re gonna have to have one in Ohio
and one in Florida your LLC has to have a presence in each state a legal presence in order to exercise the legal rights afforded that LLC in that state no official registration, no rights. that’s another story but as to how many LLC’s
make logical decisions and then form LLC’s based upon those logical decisions and if you’ve got twenty residentials well that’s probably too many for one LLC four or five million dollars in assets I’ve heard that, I’ve said that but just make it logical I mean if one of your rental properties is in
a real risky neighborhood and everybody in that neighborhood sues everybody else fine, put that one in its own LLC because the assets in that LLC are subject to the
liabilities that each one of those assets create. That whole basket is at risk. I can’t really give you more information than that because I don’t know your situation but you can think it out, you can do it. Just be logical and
don’t go overboard I had a couple of doctors from Long Beach
call me up long ago and they said that one of the lawyers had talked them into doing a different family limited partnership that was what we often used before LLC’s don’t use the family limited partnership anymore,
use the LLC but the guy had talked them into setting up 53 limited partnerships and he only charged them $5,000 PER limited partnership and he had said you don’t
want these family limited partnerships to be in California
because it’s $850 a year for the filing fee you want them to be in my state and
you need a registered agent for that state so I’ll be your registered agent
and in fact I’m an accountant too I’m going to do all the taxes and I know I’ve told this story before on my YouTube channel, but it makes the point he only charged them $1500
to act as the registered agent and to do the taxes that’s $1,500 PER family limited partnership I don’t know if you’re doing the math
but these two doctors called me up and they said Phillips, we’re not worried about asset protection anymore our lawyer has all of our money how do we get out of this? So don’t go overboard. Be logical. This is Lee Phillips talking about how many properties or how many LLC’s you have
if you’re a real estate investor

10 thoughts on “How Many Properties in an LLC

  1. Thank you Lee. My father just passed away. We have relatively little income compared to inherited land and two houses. All purchased by my grandfather in the early 50s. We want to shield our only assets from creditors or litigants to protect ourselves should Mom fall gravely ill and rack up loads of hospital bills. Thanks for jump starting my mind.

  2. But what about prior passive loss deductions? If you sold ONE property within a LLC, you do not get to deduct the prior passive losses, you will need to sell ALL property in that LLC, and file a final year LLC tax return, to release prior suspended passive losses.

  3. Why not put the homes in private tax exempt Trust? This is why we have Tax Treaties our forefathers set into place long ago. People forget about this and CPA’s aren’t even trained on it because the system won’t make money off of you.

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