Structure and its limits
Many investors hold each property, or small groups of properties, in a separate limited liability company so that a claim arising at one building is less likely to reach the others or the owner personally. That separation is more likely to hold when each company is run as a genuinely separate business, with its own accounts and no mixing of funds. Personal guarantees on loans, which lenders frequently require, sit outside that protection. The protection a creditor of the owner faces when trying to reach the owner's interest in an LLC also varies by state and by whether the company has one member or several.
Moving property, and the timing problem
Transferring a property you already own into an LLC can raise questions people overlook. A lender may treat the transfer as triggering the loan's due-on-sale clause, an existing title insurance policy may not follow the property to the new owner without an endorsement, and transfer taxes and property tax treatment should be checked. Transfers made to keep assets away from an existing or foreseeable creditor can be undone under voidable transfer law, so moving assets after a claim has surfaced often achieves little and can make matters worse. Planning is easier and more defensible while things are calm.
Insurance and the first review
Liability insurance at each property and an umbrella policy above it are usually the first line of protection, and the structure is only as good as the coverage behind it. The first task is mapping how each property is titled, which loans carry personal guarantees, and what insurance is in place. We then look for gaps, such as properties still held in your own name or companies whose records are thin. Early on we also coordinate with your accountant, because tax treatment and estate planning often shape which structure makes sense for you.
