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  1. #1
    Join Date
    Jun 2015
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    3

    Default Placing Property in an LLC

    My question involves business law in the state of: Florida

    Excuse me if I have placed this topic in the wrong area - I couldn't quire see where it could fit in the real estate section.

    My wife and I own 4 rental properties and have long been advised that we need to put them in LLC's to protect our investment. However, we have had so much conflicting advice on the matter that it's really getting confusing. An acquaintance of my wife's, who's something of a high profile investor who does seminars on property investment, told her that we should put all four properties under one umbrella LLC. Our accountant advised that we should get a seperate LLC for each house, even though it costs more to maintain them.

    Anyone with some expertise on the matter willing to clarify the situation?

    Thanks

  2. #2
    Join Date
    Oct 2006
    Posts
    16,185

    Default Re: Placing Property in an LLC

    Quote Quoting nick1933
    View Post
    My question involves business law in the state of: Florida

    Excuse me if I have placed this topic in the wrong area - I couldn't quire see where it could fit in the real estate section.

    My wife and I own 4 rental properties and have long been advised that we need to put them in LLC's to protect our investment. However, we have had so much conflicting advice on the matter that it's really getting confusing. An acquaintance of my wife's, who's something of a high profile investor who does seminars on property investment, told her that we should put all four properties under one umbrella LLC. Our accountant advised that we should get a seperate LLC for each house, even though it costs more to maintain them.

    Anyone with some expertise on the matter willing to clarify the situation?

    Thanks
    To be honest, I think that getting good liability insurance does more to protect property than putting it in an LLC.

  3. #3

    Default Re: Placing Property in an LLC

    The type of business entity, or not, depends on what you are trying to accomplish.
    Are you worried about potential creditors having a claim against your investment?
    How important are the mount of taxes you pay to you and your wife?

    Given that the establishment of a business is really an entrepreneurial question, a good place for you to start is SCORE. There are tons of retired small business owners in Florida with nothing better to do than help.

    And it's free.

    https://www.score.org/

  4. #4
    Join Date
    Jun 2015
    Posts
    3

    Default Re: Placing Property in an LLC

    With all due respect, I think you misunderstood the point to my question. Placing real estate investment holdings in LLC's is standard practice, as we've come to realize from numerous investors we've spoken to. The point wasn't about liability insurance - which we have - but about LLC methodology.

    A simple question in return would be to ask if either of you have property portfolios, and if so what your own practices are?

  5. #5

    Default Re: Placing Property in an LLC

    I own a garden shed.
    It is incorporated in Lichtenstein for tax evasion purposes (my lawnmower has 24k gold blades forged from straight bullion)
    Yeah that's how I roll.

  6. #6
    Join Date
    Nov 2013
    Posts
    6,887

    Default Re: Placing Property in an LLC

    Placing all four properties in one LLC might protect you personally from claims arising but doesn't do much to protect properties from claims. They are all assets of the LLC. If a claim arose on one property, all four properties are at risk being in one LLC.

    If each property is in a separate LLC and a claim arises on one property, the others are protected.

    That assumes that the protection of the LLC is not pierced.

  7. #7
    Join Date
    Jun 2015
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    3

    Default Re: Placing Property in an LLC

    Thanks Budwad, that's the kind of answer I was looking for. The umbrella version we were given was somewhat more complex than that (what you would expect from someone with a widespread property portfolio) and involved a major LLC with subsidiary LLC's for each property and so on. We consulted with a real estate attorney who said it would work, but it was a very complicated approach he felt could be answered in a much simpler manner. Personally the notion of simply having one for each property makes more sense.

    @Tang Zulu - As expected, to the point, informative, and overflowing with expertise on the subject matter. No property, no LLC background, but ever an opinion.

  8. #8

    Default Re: Placing Property in an LLC

    Quote Quoting budwad
    View Post

    That assumes that the protection of the LLC is not pierced.
    Which is very big assumption given that an alter ego liability doctrine can often easily be applied.

    OP, your question is not easily answered. If you have no experience in running a business you need more advise than a few posts on an internet forum. No one can simply tell you what type of business entity you need to establish. Just placing the 4 properties in separate LLC's does automatically mean no one will ever be able to get at your personal assets. There is more to it than that. With your insolent attitude however I am sure you will have zero problems figuring it all out.

  9. #9
    Join Date
    Sep 2005
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    98,846

    Default Re: Placing Property in an LLC

    Quote Quoting nick1933
    View Post
    The point wasn't about liability insurance - which we have - but about LLC methodology.
    Part of the point, though, is to protect yourself from personal liability. You have to consider the extra costs you incur through a more complicated business structure against the benefits of that structure.
    Quote Quoting Tang Zulu
    View Post
    Which is very big assumption given that an alter ego liability doctrine can often easily be applied.
    Actually, as a general rule it's difficult to pierce the corporate veil. But we're back into the issue of liability which the OP says doesn't interest him, even though most others here believe it should.

  10. #10
    Join Date
    Mar 2013
    Posts
    17,916

    Default Re: Placing Property in an LLC

    Quote Quoting nick1933
    View Post
    Thanks Budwad, that's the kind of answer I was looking for. The umbrella version we were given was somewhat more complex than that (what you would expect from someone with a widespread property portfolio) and involved a major LLC with subsidiary LLC's for each property and so on. We consulted with a real estate attorney who said it would work, but it was a very complicated approach he felt could be answered in a much simpler manner. Personally the notion of simply having one for each property makes more sense.
    You wanted an answer from somebody with property ownership experience, here it is.

    I owned 3 rentals for 20 years. Never had an LLC. Never needed one. Never worried about protecting my assets. Always had insurance. Never been sued. Never stiffed my creditors. Always had cash set aside for rental contingencies.

    You don't "need" LLCs for "protection."

    You might "want" an LLC because of all the "wonderful" things people are telling you about them and you may be succumbing to the hype but an LLC doesn't protect you from lawsuits arising out of your own negligence, breaches of contracts that you personally guarantee, or defaults with secured creditors. Florida has an unlimited homestead exemption so your own house is exempt from judgment.

    Tell me exactly what "you" are worried about protecting and I'll tell you if you need an LLC.

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