How Many LLCs Do You Need for Your Investment Properties?

🔒Setting up an LLC provides asset protection for your investment properties and limits personal liability.

💼Having multiple LLCs can be more advantageous for higher-value properties to mitigate risk and protect your assets.

💰Consider the costs associated with maintaining multiple LLCs, such as filing fees and tax preparations, and weigh them against the potential benefits.

📚You may start with one LLC and gradually separate properties into individual LLCs as your real estate portfolio grows.

🏷️Deciding on the number of LLCs depends on factors like the value of properties, insurance coverage, and individual risk tolerance.

Is it necessary to have an LLC for investment properties?

—Having an LLC provides liability protection and separates your personal assets from your business assets, reducing the risk of losing everything due to potential lawsuits.

Should I set up a new LLC for each investment property I own?

—It depends on the value and size of your properties, your risk tolerance, and the associated costs. For lower-value properties, having multiple LLCs may not be cost-effective.

What are the costs involved in setting up and maintaining an LLC?

—The costs include filing fees, franchise taxes, and legal and accounting fees. A range of $2,000 to $2,500 per LLC should be considered depending on the state and services used.

Can I change the structure of my LLCs over time?

—Yes, you can restructure your LLCs as your real estate portfolio grows. Gradually separating properties into individual LLCs can provide better asset protection and tax planning opportunities.

Where should I set up my LLCs?

—Consider setting up your LLCs in the state where your investment properties are located. This avoids additional filing fees and compliance requirements for foreign entities.

00:00Introduction to the importance of LLCs for investment properties and the question of how many LLCs you need.

01:04Explanation of the concept of LLCs as baskets of eggs and the role of a revocable living trust for asset protection.

02:18Separating assets from operations and the considerations of having properties inside an LLC.

03:55Discussing the expenses of setting up and maintaining an LLC and how it affects cash flow.

06:20Determining the number of properties that should be in one LLC and when it's necessary to have multiple LLCs for asset protection.

08:30Factors affecting the decision to separate properties into multiple LLCs, such as the value of properties and individual circumstances.

10:48Exploring the considerations for LLCs when wholesaling or flipping properties.

13:26Considering the state in which to set up an LLC and the importance of aligning it with your investment property location.

15:37Conclusion and encouraging viewers to seek professional advice regarding their specific circumstances.