OfflineA question for those who own multiple property. I have acquired and now own about ten rental properties through foreclosure, REOs, short sales. At first I would get a business license and rent each one, and individually keep the books for each one as well. Now that it's getting quite big, should I just get one business license for all of them (e.g. "My Rental Company LLC). It seems like this would be much easier for accounting, write offs, etc.
I appreciate your feedback.
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Hi I have questions for you. Why do you want a business license? What the purpose? Check with your state, but here in Washington you need a single license if you live in the city limits. One license should cover all of your rentals.
"Don't tell me I can't, Tell me how I can."
What city/state do you live in?
The reason behind putting each property under a separate LLC is for asset protection. For example, if your tenant at 'my rental #1' got injured on the property because of your negligence, he would try to sue you and try to get compensated for as much as he could get out of you; in this case, your 10 properties. If you have each property under different LLCs, your tenant at 'my rental #1' can only sue 'my rental #1', so your other nine properties in their individual LLCs would be protected. However, If all your properties were in that one LLC, you could lose everything with one lawsuit.
Valerie
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Thank you both. Great answers!
Both have great answers, you want to protect your self as Valerie stated or you can lose all you have, much success, Jim
jbischoff
But, some recent cases have shown that LLCs that are owned by one individual are not as protected as it seems. Once a lawyer uncovers that it is simply a shelter for a property, the veil can easily be removed and the true ownership revealed.
Instead of having LLC, I would recommend looking into an umbrella liability policy to cover all your rentals. It would be highly unlikely to have multiple lawsuits on your rentals at the same time. Having a large umbrella policy will cover you in the even of a lawsuit and it will keep your properties safer than in a LLC.
Great advice on the insurance. I often would argue with a former partner because he would always want to keep expenses low and profits high. He would try to cut corners wherever possible. I put my foot down when it came to insurance. You never know when an accident or fraud will happen on your property.
I had a situation where I was evicting a tenant so to get back at me, she pretended to fall going down the stairs coming from her unit. She went to the hospital for an x-ray and was diagnosed with a minor sprain. She tried suing me for tens of thousands. I had witnesses that said they saw her with a hammer and screwdriver pounding away at the exterior stairs to make them look faulty. I had pictures of where she obviously chiseled away at the wood. We went to arbitration and the insurance company ended up "settling" for $2000.
LLC or not Insurance is of monumental importance. An umbrella policy is a great thing to have. Just out of curiosity Simon, do you have your properties deeded in your name or in an LLC?
Live well, laugh often and love much.
Walter Fabiszewski
Southern, FL