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 won’t affect any others held by you. Some would say that this is the main reason to hold each deal individually. Watch the video for a deeper conversation on how valid this is.
Related: Stop! DON’T Put Your Investment Property in an LLC If…
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.
- RULES OF HOME AFFORDABILITY
- WHAT IS AN FHA 203K LOAN?
- REAL ESTATE TRANSACTION RED FLAGS
- NATIONWIDE HALT ON EVICTIONS
- PROS AND CONS OF DOING AN NEW LLC FOR EVERY REAL ESTATE TRANSACTION
- Estate Planning
- For Sale by Owner
- Home Buying
- Home Selling
- Land Use
- Real Estate Brokers
- Real Estate Markets
- Tax-Related Issues
- Title Issues