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Investors...You NEED Multiple LLCs

By
Services for Real Estate Pros with Nobility Partners, LLC
Hey, I was recently leaving a comment on a user's blog and realized that the information could be good for everyone.  So here it is.

"I recommend you start an LLC for EACH of your investment properties.  For example, you would have one called "123 Main St. LLC".  And another called "8910 Washington Ave. LLC".  That way not only can litigators not go after your personal property, but they cannot even go after your other properties.  When you've got a few properties and troublesome renters, contractors or neighbors, you'll be glad you did."  

I've done loans for investors who do this and they seem to be the ones that are well read and very successfull.  I, for one, will be doing this from now on.

Hope it helps. 

Abe
Show All Comments
Dan Bales
Dan Bales, Broker - San Jose, CA
Broker/Owner GRI RECS e-PRO

Excellent recommendation, Abe.

There's a very good chapter on the advantages of doing this in a recently published "Rich Dad" series book entitled "Real Estate Advantages". It's co-written by a CPA and an attorney. I highly recommend the book.

P.S. I picked it up at Costco for only $10.99! 

Dan 

Jan 23, 2007 03:27 PM
Chris Griffith
Downing-Frye Realty, Bonita Springs, FL - Bonita Springs, FL
Bonita Springs Listing Specialist - Agent
My area is investor heavy and most of them have LLC's. 
Jan 23, 2007 10:53 PM
Patricia Beck
RE/MAX Properties, Inc., ABR, GRI, SRES - Colorado Springs, CO
Colorado Springs Realty
Great idea!  I've never thought of having an LLC for each property and I haven't read about that yet either.  We want to eventually purchase more than one investment property so this will come in handy.
Jan 26, 2007 03:21 PM
Patricia Beck
RE/MAX Properties, Inc., ABR, GRI, SRES - Colorado Springs, CO
Colorado Springs Realty
I read Rich Dad poor dad and he talks about that but not to this detail.  Great book though!
Jan 26, 2007 03:22 PM
Dan Bales
Dan Bales, Broker - San Jose, CA
Broker/Owner GRI RECS e-PRO
It's not in the original Rich Dad - Poor Dad book.  LLC's are discussed in Chapter 23 of "Rich Dad's Real Estate Advantages" by Lechter and Sutton.
Jan 27, 2007 03:20 AM
Nicole Nelson
Alpha Credit Advisors - New York, NY
This is a very good idea. Most investors think that by having one LLC, they are truly protected. The more protection the better. I will definitely pass this info on.
Jan 27, 2007 04:48 AM
Joe Zekas
YoChicago / New Homes Magazine - Chicago, IL

This is a very simplistic and unsophisticated approach to the issue. 

Unless you're talking about larger properties, or you want to have different ownership interests in each, it can make little or no sense to have multiple LLCs.

The costs of multiple LLCs mount uickly - incorporation fees, franchise taxes, recording fees, etc. Not to mention filing multiple tax returns, keeping separate sets of books, you get the picture.

There's a better, simpler, molre effective, less costly way to achieve the liability protection - it's called insurance.

Feb 02, 2007 12:59 PM
Joe Zekas
YoChicago / New Homes Magazine - Chicago, IL

Terry,

Do you have any idea what you're talking about? I don't think so.

It's a good thing that most investors get advice on this issue from attorneys rather than from mortgage brokers.

 

Feb 02, 2007 02:22 PM
Abe Loper
Nobility Partners, LLC - Lynchburg, VA
Joe, 
   Dude, you gotta chill a bit and be a little more cordial and professional on here.  Either way, according to your profile, you state that...

"What we're good at

We're superb at building Internet-based ad management systems..."


Sounds like you may not be the best person to go to for advice on this issue.  Thanks for your input and conversation.  You're always welcome to comment, but please be more kind a professional toward the others who take the time to comment based on their experience and training....regardless of whether or not you agree.  


Abe 

Feb 02, 2007 03:34 PM
Anonymous
Anonymous
Unfortnately LLCs are not that simplistic. With an LLC you have to name a general partner which is either a corporation or individual but either case still bears the liability. Even if you use a corporation as the general partner, you still have to name board of directors who are in some way liable and which is why most corporation's board of directors purchase insurance...so long story short, it's cheaper just to get the insurance..the costs to set up multiple LLC could result in diminishing returns (especially the costs associated with LLCs in ILLINOIS)..
May 27, 2007 04:24 PM
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