Everyone online constantly pushes the idea of putting every single rental property into its own separate LLC for liability reasons, but nobody ever talks about the actual administrative hell of maintaining them all.
You end up needing a dedicated spreadsheet just to track franchise taxes, annual report deadlines, and state-specific compliance updates. Then comes the mail.
You set up a standard incorp registered agent to check the statutory box and keep your actual home address off the public records, but you still end up fielding endless compliance notices and payign their recurring fees on top of whatever the state charges.
When you start buying across different states, you are suddenly tracking distinct foreign qualification rules and dealing with those fake official-looking "certificate of status" scam letters that constantly flood your agent's inbox. It stops being about asset protection and just turns into an endless paper chase.
The corporate veil is great until you accidentally pierce it yourself just because you missed one obscure state filing deadline. The administrative overhead and constant nickel and diming almost wipes out the cash flow on smaller doors anyway.
The "one LLC per property" advice is an administrative nightmare
byu/rogeelein inRealEstate
Posted by rogeelein
8 Comments
Yeah, one LLC per property can sound good but often turns into exactly what you described. A practical middle ground is grouping, where you keep things separated by state once there are out-of-state holdings, or split properties into a couple LLCs based on liability profile instead of creating a new entity for every address. But either way, insurance will still do a lot of the heavy lifting.
The only one pushing that is idiots or people who stand to profit from it. E.g. Lawyers or accountants.
Nobody with a functioning brain does that
Are these “everyone online” here in the room with us right now?
I/we do this because our capital stack is different every time and we need to write Operating Agreements with our investors (also our lender can require this at times for large loans).
Otherwise, no reason to do this.
My attorney’s advice was to keep the corporate structure simple and make sure the insurance policy is good. While that advice may not be true for everyone, it has served me well so far.
It’s not everyone, but I do agree this is more common advice than it deserves to be.
If I could start all over I wouldn’t even use an LLC. I’d have things in my name with really good liability and umbrella insurance policies
Holding a property in an LLC also kicks properties in California into rent control protections under AB 1482 that would otherwise not apply.
it is fine to put several smaller properties in the same LLC if they are in the same state. I have heard some people try not to put more than 1 or 2 million in properties in each llc. That may mean 5 or 6 condos in one and a very expensive house in another. There are more admin costs for each llc you have and they can get away from you. where i work there are like 50+