Real Estate LLC Structure: What You Need to Know

When people begin investing in real estate, one of the first “rules” they hear is: “Put each property in its own LLC.”
It sounds smart, it sounds safe — and sometimes it is — but the truth is more nuanced.

Whether you’re buying your first rental, expanding your portfolio, or reorganizing how your assets are held, understanding the why behind each structure is crucial. Let’s break it down in simple, practical terms so you can choose the setup that fits your goals, your risk tolerance, and your budget.

Should I Start an LLC For Real Estate Investing?

LLCs are popular for real estate because they offer:

• Liability protection (your personal assets stay separate)
• Flexible taxation (pass-through, S-corp taxation, etc.)
• Estate planning benefits
• Partnership structure options
• Cleaner bookkeeping and exit strategies

But how many LLCs you need depends on what you’re holding, how risky those assets are, and your long-term strategy.

Option 1: One Property Per LLC

Pros, Cons, and When It Makes Sense

This is the classic investor setup.

✔️ Pros

• Maximum liability isolation:
  If one property is sued, only that LLC is at risk — not your entire portfolio.
• Cleaner books & records:
  Easy for bookkeeping (hello, Money section!), taxes, and selling individual properties.
• Attractive for high-value or high-risk assets:
  Duplexes, short-term rentals, properties in litigious states, or buildings with many tenants.

❌ Cons

• Cost:
  Multiple LLCs = multiple filing fees, annual state fees, registered agent fees, and possibly extra tax prep. (In Washington, for example, each LLC requires its own annual report.)
• Administration overload:
  More bank accounts, more bookkeeping files, more paperwork.
• Financing complexity:
  Lenders don’t always love lending directly to brand-new LLCs.

⭐ Best For

• Medium to large portfolios
• High-risk property types
• Investors who want clean, easily sellable assets
• Those comfortable with extra administrative tasks

Option 2: One LLC Holding Several Properties

Pros, Cons, and When It Works Well

A simple and cost-effective option for many newer investors.

✔️ Pros

• Cost-effective:
  Only one LLC filing, one annual report, one registered agent, one bank account.
• Easier bookkeeping & admin:
  (Though you still want good sub-account tracking for each property.)
• Ideal for new investors:
  Especially if cash flow is limited early on.

❌ Cons

• Liability stacking:
  If something happens with one property, all properties in that LLC are at risk.
• Exit strategy gets messy:
  If you sell one property, untangling it from the LLC can be awkward.
• Mixed asset classes don’t always play nicely together:
  For example, a short-term rental and a long-term rental in the same LLC may not be ideal.

⭐ Best For

• New investors with 1–3 doors
• Low-risk properties
• Investors comfortable with shared liability
• Smaller markets or lower-value homes

Option 3: The “Series LLC” Structure

(Only available in certain states — and Washington State is not one of them.)

A Series LLC allows one parent LLC to have multiple “child series,” each holding a different property. Each series acts like its own LLC.

Some states that allow Series LLCs: Delaware, Texas, Nevada, Illinois, Tennessee, and a few others.

✔️ Pros

• Lower cost than forming many individual LLCs
• Strong liability separation
• Centralized management

❌ Cons

• Not recognized in all states
• Financing can be tricky
• Added legal complexity
• Washington State does not offer Series LLCs
  (though you can sometimes own out-of-state Series if you qualify)

Option 4: Holding Company + Subsidiary LLCs

This is a favorite among experienced investors.

Structure:

• A holding company LLC owns shares/membership in
• Subsidiary LLCs, each holding 1 or more properties.

This is common when people build portfolios across multiple states or add partners.

✔️ Pros

• Same liability protections as one-property-per-LLC
• Holding company keeps ownership centralized
• Simplifies partnerships — you can give people ownership in one entity instead of each property
• Cleaner bookkeeping
• Easy estate planning and generational wealth transfers

❌ Cons

• Higher startup costs
• Requires more sophisticated bookkeeping
• Requires more organized legal documentation

⭐ Best For

• Multi-state investors
• Portfolios of 5+ doors
• People preparing for long-term legacy planning
• Investors who want clean separation between ownership and operations

Option 5: Land Trusts (Often Partnered with LLCs)

Not an LLC — but sometimes used with an LLC.

A land trust holds the title to the property for privacy, while an LLC is the beneficiary that receives income and handles liability.

✔️ Pros

• Your ownership isn’t publicly searchable
• Often used in creative financing
• Can help with transfer of ownership

❌ Cons

• Limited liability on their own
• Rules vary by state
• Can complicate financing
• Best used with professional guidance

So… Should You Put Each Property in Its Own LLC?

The truth:

It depends on three things:

1. Your Risk Level

• More tenants = higher risk
• STRs = higher risk
• Older buildings = higher risk
• Pools, elevators, boilers = higher risk
• Commercial tenants = higher complexity

Higher risk = stronger reason for separate LLCs.

2. Your Budget

Can you afford:

• Multiple annual state fees?
• Multiple registered agent fees?
• Multiple bank accounts and bookkeeping systems?

If not, start with one LLC and grow into structure over time.

3. Your Exit Strategy

If you want to:

• Sell properties individually → separate LLCs make it cleaner
• Hold long-term → one LLC may be just fine
• Build generational wealth → holding company + subs makes future planning simple

My Personal Recommendation

This is based on what works for most investors, however if you have more than one or two properties, it’s time to chat with a lawyer who is an expert in real estate, business structure, and investing.

If you’re starting out:

➡️ One LLC with good bookkeeping (separate classes or sub-accounts per property)

If you’re growing beyond 3–4 doors:

➡️ Consider separate LLCs or a holding-company structure

If you want the cleanest liability protection + best long-term planning:

➡️ Holding company + one-property-per-LLC

Keep It Simple — and Legal

The worst thing you can do is create a structure too complicated for you to maintain.
Missed filings, incorrect bookkeeping, or commingled funds can destroy the liability protection you’re trying to achieve.

Start simple. Build as you grow.
And when in doubt, talk with:

• A real estate attorney
• A CPA familiar with real estate
• A bookkeeper (hi 👋)

 

FAQs

 

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