Auto news on Youtube Aug 31 2017

Hi Lee Phillips here. Welcome to my YouTube channel.

I'm an attorney and I want to talk about a question that I get quite often.

The Guru's tell you that you should put each one of your real estate investment properties in a different LLC

and is that good?

Yeah, that's good from an asset protection standpoint

no question that it's better to have one egg in each one of your baskets

instead of a bunch of eggs in one basket

basically the concept.

However, you can't manage the paperwork associated with six trillion LLC's.

If you've got twenty properties and you've got a separate LLC for each property

you're gonna drown in your own paperwork

now the lawyers they'll love to do that for you

because they get to then charge you for 20 LLC's

Great deal, right?

Yeah, if you're the lawyer.

Well, you've got to get a tax ID number you've got a file a tax return

you've got to do the paperwork with the state and pay the fees

and if you're in one of those "foreign" countries like New York and New Jersey and California

then you're paying a lot of money for one of your LLC's every year in the state fees.

So these all add up.

If you've got twenty California LLC's, you're looking at, what?

Like $17,000-18,000 in legal, in state fees every year.

You can't do that.

But in addition to that you can't do the paperwork

you just drown in your own paperwork.

So what I suggest is is that you make a logical division of your properties

and create a basket to hold those kind of properties

create another basket to hold a different type

If I've got three single family rental units and one apartment

fine, let's put the apartment in one LLC and the three single families in another

or if I've got some high-end single families, let's put those in one

and if I've got a bunch of Section 8 low-end stuff let's put them in another one.

Divide up logically.

If I've got some properties in Ohio and some properties in Florida

let's have one in Florida and one in Ohio

by the way refer to the YouTube on where do you put your LLC, which state you put it in

you're gonna have to have an LLC that's in Ohio that registers in Florida

or you're gonna have to have one in Ohio and one in Florida

your LLC has to have a presence in each state

a legal presence

in order to exercise the legal rights afforded that LLC in that state

no official registration, no rights.

that's another story

but as to how many LLC's make logical decisions

and then form LLC's based upon those logical decisions

and if you've got twenty residentials

well that's probably too many for one LLC

four or five million dollars in assets

I've heard that, I've said that

but just make it logical

I mean if one of your rental properties is in a real risky neighborhood

and everybody in that neighborhood sues everybody else

fine, put that one in its own LLC

because the assets in that LLC are subject to the liabilities that each one of those assets create.

That whole basket is at risk.

I can't really give you more information than that

because I don't know your situation

but you can think it out, you can do it.

Just be logical and don't go overboard

I had a couple of doctors from Long Beach call me up long ago

and they said that one of the lawyers had talked them into doing a different family limited partnership

that was what we often used before LLC's

don't use the family limited partnership anymore, use the LLC

but the guy had talked them into setting up 53 limited partnerships and

he only charged them $5,000 PER limited partnership

and he had said you don't want these family limited partnerships

to be in California because it's $850 a year for the filing fee

you want them to be in my state and you need a registered agent for that state

so I'll be your registered agent and in fact I'm an accountant too

I'm going to do all the taxes

and I know I've told this story before on my YouTube channel, but it makes the point

he only charged them $1500 to act as the registered agent and to do the taxes

that's $1,500 PER family limited partnership

I don't know if you're doing the math but these two doctors called me up

and they said Phillips, we're not worried about asset protection anymore

our lawyer has all of our money

how do we get out of this?

So don't go overboard. Be logical.

This is Lee Phillips talking about

how many properties or how many LLC's you have if you're a real estate investor