Series LLCs and Holding Real Estate

If you’re a real estate investor, a Series LLC might just be the last entity you need to create. Here are just some of the reasons why they work so well:

  1. Flexibility. A Series LLC is permitted, under state law, to create as many sub-LLCs, called Cells, under the Parent LLC. Each one of the Cells can operate independently from the Parent, even down to separate ownership and tax classification.
  2. Liability Protection. As long as the Cell maintains itself independently, ie books, records, banking, etc., it is given legal protection from other Cells and from the Parent (and vice-versa). In practical terms, this means you can buy multiple properties, keep them in separate Cells, and as long as you track the income and expense connected to each property, you have asset protection between the Cells, and therefore your properties. That’s considerably different than keeping all of those properties in the name of one regular LLC or limited partnership.
  3. Cost Savings. In almost all states with Series LLC law, there is a single cost to create the Parent LLC and to maintain it each year. The Cells don’t cost extra. The more Cells you have, the more money you’ll save over creating and maintaining separate LLCs.
  4. Privacy. In almost all states with Series LLC law, the Cells are not required to be registered with the state. That means your ownership is more private when compared to regular LLCs, especially in states that make a lot of ownership information public.
  5. Acceptance by Other States. Series LLCs can be cross-registered into other states, even those without Series LLC law of their own, usually for a lower fee than creating a new entity in that state. So you can use your Delaware or Texas Series LLC in Missouri, Georgia, Florida – wherever you are looking at real estate.

If you’re looking for a structure that can grow with you, take a good look at a Series LLC. Some of our clients have and are using this structure to save thousands each year on renewal and resident agent fees. Will it work for you? And what will you do with the money you save?

There are many variables when you’re structuring a business. That’s why it’s hard to go through a quick-service website. Unless you talk to someone who’s got some knowledge and experience on both the tax and the legal side, it’s hard to know what you don’t know. And that can leave you vulnerable.

Got questions? Contact us! We’re here for you.

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