What is the advantage of having a Series LLC over Multiple Traditional LLCs for real estate investments?

While it is ideal to have one property per LLC for optimal asset protection, most investors would find maintaining a Traditional LLC for each property cumbersome and exhausting. Suppose you have four properties. If you have four Traditional LLCs, you have to worry about and pay for at least four filing fees, four separate EIN numbers and tax filings, any in-state taxes for each LLC, and possibly legal expenses for setting up each of these entities. And that’s not even getting into the details of what happens if you have LLCs in multiple states, each with different legal regulations and tax obligations. Bookkeeping would become increasingly burdensome as your portfolio grows as well. This combination of factors would quickly become a headache for anyone.

A Series LLC formed in a business friendly state such as Texas or Delaware is a much more efficient and cost-effective solution for investors with multiple properties--or even those planning to get multiple properties. To use Texas as an example, you pay a single low ($300) filing fee. There is no in-state franchise tax, although you must file “no taxes due” once annually with the State Comptroller. You can add as many Series as you like, and your properties can be scattered all over our fair nation and it doesn’t make a difference for the entity. If you’re banking correctly, you can manage all of your properties with a single bank account. The Series LLC is also easy to use with traditional bookkeeping methods. It can also be paired with Anonymous Trusts for an extremely high level of asset protection. You receive all of the same benefits that you would get from multiple Traditional LLCs, but with a fraction of the headaches, costs, and most of the time, legal fees.