Sounds like this lawyer wants to collect a lot of fees. You don't really need to do that. Just make sure you follow sound business practices, follow the law, address maintenance requests in a timely manner, and carry a beefy liability insurance policy. Get enough to cover your entire net worth, including the properties.

It's debatable how much protection single-member LLCs offer. The idea of limiting liability is that individual LLC investors aren't involved in the day-to-day management that prompted the issue, but if you're single member LLC who self-manages the property, then of course you do have knowledge. I can't speak to whether or not you'd be able to argue that personal assets should be excluded from the judgment.

One more consideration: the financial considerations of owning multiple LLCs. I can't speak to NJ law, but to solidify the asset protection of an LLC, in Missouri I have to maintain separate accounts for each LLC. That means:

1) Separate operational checking account.

2) Separate security deposit trust account.

3) Separate capital reserves and escrow for taxes and insurance account.

4) Separate debit card. Also, if you have credit cards (I don't), you'd need a different one for each LLC.

So... we're looking at at least 4 (possibly 5) accounts PER LLC. That's 40-50 accounts. Sounds like a pain in the behind.

I do have two LLCs: one for commercial units and one for residential units. That's as much as I care to mess with. Each LLC's finances are kept separate from my personal finances and each other. Each LLCs has it's own General Liability insurance policy, as do I with an umbrella policy.

Liability insurance is so cheap for the coverage and peace of mind. We have an umbrella coverage personally and General Liability for each LLC too.

We use our LLCs as buying entities, and as a handy way to leave property through our trust and will. Easier to separate and leave an LLC to each kid than multiple property deeds to fiddle with.

Ted, you do not say why your attorney recommends a new/separate LLC. "To collect rent"? Any individual landlord can collect rent, you don't need an LLC for that.

Most of the advocates for LLCs are talking about limiting your exposure/liability for injuries. I ASSUME that that is what your attorney has in mind. For me, it doesn't work. An LLC provides my wife and me with no protection. If someone gets injured due to negligent repairs or maintenance or ... on one of my units, my wife and I would be personally sued, along with the LLC, and the LLC would not provide protection -- we are very hands on, and are not silent investors.

To protect the equity in each unit from any liability? If I am personally liable, only a completely incompetent attorney representing the injured party would be fooled by multiple LLCs.

My protection is in the form of a good insurance policy!

Ted, you do not say why your attorney recommends a new/separate LLC. "To collect rent"? Any individual landlord can collect rent, you don't need an LLC for that.

Most of the advocates for LLCs are talking about limiting your exposure/liability for injuries. I ASSUME that that is what your attorney has in mind. For me, it doesn't work. An LLC provides my wife and me with no protection. If someone gets injured due to negligent repairs or maintenance or ... on one of my units, my wife and I would be personally sued, along with the LLC, and the LLC would not provide protection -- we are very hands on, and are not silent investors.

To protect the equity in each unit from any liability? If I am personally liable, only a completely incompetent attorney representing the injured party would be fooled by multiple LLCs.

My protection is in the form of a good insurance policy!

Mike45: I he said that’s what he does for his rentals. But then again he’s a lawyer and does his own setups for each LLC I’m sure. He suggested umbrella policy as well. As I didn’t buy it with an LLC the only real benefit seems to be the ability to collect rent to an LLC. To sound more professional I guess… Sounds like the LLC itself doesn’t do tons, and the most important thing is big liability umbrella coverage. I’m calling my insurance agent to see what they offer… We are hands on as well- screening tenants, Enron, advertising, collecting, communicating. Its nearby so no need for an agent to do it…. As for my lawyer, I need to ask if we can just use the existing LLC to collect. We have a bank account already. Some folks here said they use one for all their units. Hoping to hear from some others as well.

Oh and we don't have LLCs for each property, just certain groups of properties that make sense to us from an inheritance standpoint.

Each state is different, so look up the cost of filing fees in your state. Whatever is left over is his time. Use that information to decide whose interests he has at heart.

For me, in TX, I pay about $325 per LLC filed. Then I submit two pieces of paper (one now, I think) each year to keep it active and in good standing. But every state is different.

Fast-forward, and series LLCs are more of a thing in TX now than they were when we started. So you might look into a series LLC and see if that will give you the privacy you're looking for, or if you genuinely want x number of LLCs. I usually have about 5-7 houses per biz. In an ideal world, I'd have one LLC per house, primarily for privacy. But I definitely don't want to be like the guy who goes to the local tax sale, and I was curious about what his biz looked like, and so I started checking in on him, ready to use all my powers of librarian-fu... and it took, like, 5 minutes to see that he had over 200+ properties all held by a single entity that he'd named after himself. Augh. :)

I have all my doors under one LLC.

I am slowly learning the ropes on trusts from a buddy on here and from MrLandTrust.

I think those will give more privacy than the LLC will, plus it makes estate planning easier.

When we set up the LLC our tax guy at the time did it for us. If we were to do it today we would just do it ourselves.

I know people in my area that make up names of companies for collecting rents. I guess they are SP, but not LLC for sure.

As far as I know you can rent as John Smith and collect rents as long as you have proof of ownership.

But as others have mentioned, check your local laws. You are in NJ and that is not known as a LL friendly state.

WMH: intriguing idea. You group properties so as to make it easier for inheritance down the line. I checked and the laws were tightened (in NJ) around buying with LLCs and hiding. As we bought it in our names this shouldn’t apply…

Zero: All under the same LLC. From what most folks here said, it seems like money down the toilet to have a lawyer set up LLCs for each property. Funny that folks can use random names for companies to collect. It seems it would also get chaotic to have separate LLCs with separate reports and registration fees, then all the lawyers fees. Makes sense to put it all under one, and keep all the various tenant deposit holding accounts organized.

6x6: good reminder about the “you need to do this…” Yep! In the selling something.

Deanna: thanks for the advice! Filing fees is one sum, the rest (and it’s a bundle) is his time. There’s the annual registration renewal here, but it’s like 50 bucks. I need to look up the LLC filing fee.

Series LLC is something new for me. I hadn’t heard of it but it sounds like it could be good down the line. (Need more properties first!) Privacy reason’s definitely part of it. My accountant said everyone can click around and find out with some effort anyway. But make them do more effort Id say… the guy smith hundreds of houses down there who named it after himself and listed it under his name sounds like the opposite of what I’d want to do. Ha!

Ray in Pa: separate land trust for each ? Is this for estate planning or for the rental business itself? Also, LLC as beneficiary for all houses in the trust?

Deanna: thanks for the advice! Filing fees is one sum, the rest (and it’s a bundle) is his time. There’s the annual registration renewal here, but it’s like 50 bucks. I need to look up the LLC filing fee.

Series LLC is something new for me. I hadn’t heard of it but it sounds like it could be good down the line. (Need more properties first!) Privacy reason’s definitely part of it. My accountant said everyone can click around and find out with some effort anyway. But make them do more effort Id say… the guy smith hundreds of houses down there who named it after himself and listed it under his name sounds like the opposite of what I’d want to do. Ha!

Ray in Pa: separate land trust for each ? Is this for estate planning or for the rental business itself? Also, LLC as beneficiary for all houses in the trust?

Deanna: thanks for the advice! Filing fees is one sum, the rest (and it’s a bundle) is his time. There’s the annual registration renewal here, but it’s like 50 bucks. I need to look up the LLC filing fee.

Series LLC is something new for me. I hadn’t heard of it but it sounds like it could be good down the line. (Need more properties first!) Privacy reason’s definitely part of it. My accountant said everyone can click around and find out with some effort anyway. But make them do more effort Id say… the guy smith hundreds of houses down there who named it after himself and listed it under his name sounds like the opposite of what I’d want to do. Ha!

Ray in Pa: separate land trust for each ? Is this for estate planning or for the rental business itself? Also, LLC as beneficiary for all houses in the trust?

Deanna: thanks for the advice! Filing fees is one sum, the rest (and it’s a bundle) is his time. There’s the annual registration renewal here, but it’s like 50 bucks. I need to look up the LLC filing fee.

Series LLC is something new for me. I hadn’t heard of it but it sounds like it could be good down the line. (Need more properties first!) Privacy reason’s definitely part of it. My accountant said everyone can click around and find out with some effort anyway. But make them do more effort Id say… the guy smith hundreds of houses down there who named it after himself and listed it under his name sounds like the opposite of what I’d want to do. Ha!

Ray in Pa: separate land trust for each ? Is this for estate planning or for the rental business itself? Also, LLC as beneficiary for all houses in the trust?

You hold all the paperwork for the land trust so knowing the three parties involved is difficult to track down. So if you get sued in the future - the lawsuit would be name the trust itself but that isn't a person. So try to get a deposition from something that isn't alive.

It doesn't happen.

Nothing happens unless the LLC wants it to happen - and you own the LLC.

So there are privacy factor, money savings, asset protection, estate planning, finance ability by side stepping the due on sale clause and tax savings all ruled into one multi-tool. You customize it to suit what your objective is that yea in real estate investing.

Last time I set up an LLC for a NJ property was in 2004. My lawyer showed me how to do it. It involved a name search and some filing of paperwork.

Total costs under $400.00. Start to finish inside 30 days.

One downside is that YOU cannot or process an eviction. Your LLC must do that and MUST use an attorney.

This is worth some attorney shopping.

Ray in Pa: intriguing re the land trust. First time I’ve heard about it. Sounds like the best choice for properties. Also sounds like I’ll need a lawyer who knows about this stuff!

This subject has many turns and special circumstances to be investigated.

You NEVER have several properties under the same LLC. WHY? because if you have an issue with one property, and the tenants attorney finds that owner of that property also owns other property under the same LLC, then you will be sued for the total amount all are insured for.

Wow, look at all the people that were just called dumb by a man that refuses to leave LA.

OP, just follow Ray's advice. He knows more about trusts than anyone I have seen post on here.

Trusts do not require extra work once set up. LLCs do.

Ted,

I don't know NJ law (although I did go to kindergarten in Plainfield NJ!)

Sounds REALLY high

AND complicated.

At your stage KISS. Since it's already in your name spend your time learning the biz.

A simple error during the course of business can easily render the LLC useless.

I can set up the LLC myself with some fill-in-the-blank state approved forms I bought at a MrLandlord Conference.

Or my atty charges $300. Indiana's registration fee is $88, and $75 to renew every other year.

Sign up for Legal Shield (A MrLandlord sponsor) for $30/mo and they will do it for you.

Education is profit and power so get your self to the MrLandlord conference in June! If not it's like doing your own dental work at home.

BRAD

Ted,

I don't know NJ law (although I did go to kindergarten in Plainfield NJ!)

Sounds REALLY high

AND complicated.

At your stage KISS. Since it's already in your name spend your time learning the biz.

A simple error during the course of business can easily render the LLC useless.

I can set up the LLC myself with some fill-in-the-blank state approved forms I bought at a MrLandlord Conference.

Or my atty charges $300. Indiana's registration fee is $88, and $75 to renew every other year.

Sign up for Legal Shield (A MrLandlord sponsor) for $30/mo and they will do it for you.

Education is profit and power so get your self to the MrLandlord conference in June! If not it's like doing your own dental work at home.

BRAD

2 more things. Not certain but I'm pretty sure your LLC could file a small claims suit (under $5,000). Higher amounts need an attorney.

And it used to be that you needed an attorney to represent you for a property tax appeal for county or state Tax Court appeals. That changed a few years back where a member can now represent the LLC without an attorney - IF the current property taxes - not the assessment but the latest actual property taxes - are 25,000/year or less. You MUST have an attorney represent you if the latest actual property taxes are over 25,000/year.