Corporate Structures Series, Post #2: Cost Savings of Series LLCs for Real Estate Investors

There’s a new entity structure in town taking real estate investors by storm: a Series Limited Liability Company. Series LLCs are great vehicles for real estate investments, although they may be used for other purposes too. The entity structure enables the organizers to have a single, filed LLC with the Texas Secretary of State, and also have separate, but associated, holding entities known as individual “series” or subparts of the LLC.  These individual series are affiliated with the LLC, but maintain separate debts, liabilities, employees, and books from the LLC.

Series LLCs can be extremely cost-saving and beneficial for a real estate investor.  For instance, say an investor purchases 10 rental properties. If there is a problem at one property, the investor does not want any of the remaining 9 properties to be implicated in the debts or suits of that first property. The investor has not heard of a Series LLC, so the investor files and registers 10 separate (non-series) LLCs with the Texas Secretary of State, one for each rental property. The investor’s goal is to keep the liabilities of each property completely separate. The filing fees alone would be approximately $3,000.  On the other hand, say the investor employed a Series LLC.  The investor could file the Series LLC and 10 assumed name certificates for the series, one for each of the 10 properties. Remember, each series maintains separate liabilities and debts from the Series LLC and the other series. The filing fees for this structure would be approximately $550, a savings of about $2450! In addition to cost savings, a Series LLC provides the investor with great flexibility in terms of the management of each series. The investor may choose to have all the same members or managers for the LLC and series, or the investor may choose to have certain members or managers running one series, and different members or managers running the other series.

If you are considering a real estate investment and you have questions about a Series LLC, give us a call.  Choosing an entity type for your business does not have to be an overwhelming decision. Whether you need a Series LLC or whether you choose to operate individually, let us help you navigate the choices. Give us a call at (254) 300-7909 or come by and see us. We look forward to serving you.