Pros of Using a New LLC Every Deal
Ownership structure: Perhaps you are working with several different owners on a new deal. It makes sense to have a new LLC, as it will define the ownership percentages and the roles of each owner.
Working in a new state: This could be argued either way, but to me, it makes sense to incorporate in the state where your investment property is.
Doing a flip: Many investors do a new LLC every flip. This makes sense, as it separates that flip from other properties with respect to taxes and liability. More on this in the video above.
Asset protection: Holding each purchase in its own LLC will compartmentalize each property from the other. If there is a liability claim with one property, it wont affect any others held by you.
Cons of Using a New LLC Every Deal
Higher costs: You will pay a fee to set up each LLC and, in most states, another fee to file a return every year and a fee to your CPA.
Growing portfolio: Depending on the size of your portfolio, it might be easier to get a loan if you lump several properties into one LLC. Holding each property individually could make it harder to get financing, especially if the values are less than $100K.
Insurance: You can obtain a reasonably sized general liability policy on your properties and arguably have the same level of asset protection as you would if you held each address individually.
- ASSIGNMENT AND ASSUMPTION AGREEMENTS
- EXECUTORS DEED VS. ADMINISTRATORS DEED
- IS AN ORAL AGREEMENT FOR THE SALE OF REAL ESTATE ENORCEABLE IN MISSOURI?
- CHECKLIST OF CLOSING DOCUMENTS
- WHAT IS A FINAL WALKTHROUGH?
- Estate Planning
- For Sale by Owner
- Home Buying
- Home Selling
- Land Use
- Real Estate Brokers
- real estate finance, FSBO, real estate markets, home buyers, home sellers
- Real Estate Markets
- Tax-Related Issues
- Title Issues