Form an LLC for each property?

General Real Estate Investing
21

nope.

LLC #41 has entered into a management agreement with LLCs # 1-40.

LLC #41 deposits 40 rent checks, pays 40 mortgages and writes 40 checks to LLCs #1-40 to disburse remaining funds.

or something like that.

comingling would be LLC #1 paying bills for LLC#1 and LLC#2 paying bills for LLC#2 from the same account without such a management agreement.

IBM and Microsoft can form a joint venture, or even enter into a management agreement for rents, but you won’t catch IBM writing checks out of Microsoft’s account.

22

Ok, going by that example, if LLC #41 writes 40 bucks to LLCs 1-40, that would require the LLCs #1-40 to have bank accounts?

23

well, yes.

part of forming an entity is “funding” it. Hard to do if it doesn’t have a bank account. Also, when LLC #26 buys or sells property, the bank might expect the funding to go to/from LLC#26.

LLC #41 can manage all of the assets of the others, including cash, but they will still need to possess bank accounts. They don’t have to necessarily have activity, mind you, but they should exist.

24

Thanks for the great information on this thread.

Now, does each land trust also require a separate bank account, separate accounting, and separate tax return like a LLC does?

I have a Nevada corporation and just bought a property in NY. It seems to me that setting up a land trust and having the NV Corp as the beneficiary would achieve my liability protection goal. If I do it this way, does the NV corp still have to register in NY as a foreign corp and pay the franchise tax >:(

25

No. Each trust does not need a separate bank account. In fact, you don’t need a bank account for your land trust.

Da Wiz

26

most of my clients have 3 to 5 per

Mark -

I was under the impression that there is a cut-off for LLC’s in Texas, whereby, if they crossover the monetary threshold ($150k in assets? profits? revenue?), they will incur a franchise tax. I’ve also heard that this whole school finance debacle in Texas is pushing legislation to further tax businesses (not sure if that’s ALL or just certain enitities). Any comment from your end?

27

$150k was the old law.

new law ( try to keep up).

tax is 1% of “taxable margin” (1.5% for retailers and wholesalers)
“taxable margin” is the lesser of:
1) 70% of total revenue minus bad debts, dividends and distributions (including S-corp and LLC distributions) or
2) total revenue minus cost of goods, bad debts, dividends and distributions.

companies with revenue below $300,000 are exempt.
LP’s are no longer exempt.

28

Da Wiz, does that mean the rent income and expenses still go to the beneficiary’s bank account (my NV corp account in this case) directly? This seems to me that the NV corp will have to register in NY as it receive income from NY although the title is hold by the trustee and not the NV corp ??? This is the part I am still confused…

Also where do people usually find an unrelated beneficiary?

Thanks!