Have a Separate LLC for Every Real Estate Property

If you are building a portfolio of real estate to create rental income, you need a separate LLC for each investment property.

LLC = Limited Liability. The entire point of an LLC is to separate the liability of your business from yourself, personal savings, and other property.

If you have a problem with a tenant and you end up going to court, and all your real estate property is owned under the same LLC, your entire portfolio is vulnerable.

There are a million ways to get sued or face insolvency:

  • You could have property on a hill and a neighbor above or below claims damage from erosion
  • Your insurance fails to pay out or cover a house disaster
  • If (God forbid) you have a normal business operating under your LLC and your property(s), and your business gets sued, your property is liable

These are dumb ways to lose your property. Limit your liability. The cost to (potential) benefit is huge, and it’s a great way to hedge your downside.

You don’t need a lawyer to file an LLC. You don’t even need LegalZoom or other trash services. Some states let you file right on the government website with a small fee (i.e. $50).

I’m not a CPA, but they’ll give you the same advice.

If you can afford multiple properties, it’s high time to hire a CPA. If you have one, and they haven’t given you this advice, find a new one.

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