Most real estate investors agree that forming a separate LLC for each asset in the portfolio would be burdensome. Conversely, holding multiple properties in a single LLC is risky as well.  Is a Series LLC for real estate the answer?

This article will review the Series LLC and highlight why it is well suited for real estate investors.

Before the Texas legislature authorized Series LLCs in Texas, real estate investors had to choose between (1) forming an LLC for each property or (2) owning multiple properties within a single LLC.

Insulating multiple assets with multiple LLCs is excellent. However, the administrative headaches and cost of forming multiple LLCs make this option undesirable. On the other hand, having a single LLC own multiple properties also has drawbacks. For example, suppose someone has an unpaid judgment against an LLC that owns several properties. In that case, the judgment holder can seize all of the LLC's properties to satisfy the judgment.

Real estate investors have been able to utilize Series LLCs in Texas since 2009. Series LLCs allow real estate investors to enjoy the streamlined operations of a single LLC while simultaneously gaining the asset protection usually linked with multiple LLCs.

Whether or not a Series LLC for real estate is worth the cost depends on various factors, including the scale of your investments and risk tolerance. The initial cost of forming a Texas Series LLC (~$800) is greater than the cost of a traditional Texas LLC. Each new series, however, is quick and inexpensive ($300). When comparing the two structures (Series LLC vs LLC), opting for the Series LLC becomes financially advantageous if you intend to own two or more properties.

The Series LLC offers real estate investors a powerful combination of operational efficiency and robust asset protection within the framework of a single entity, redefining the landscape of risk management in real estate ventures. Embrace this innovative structure to streamline operations while fortifying your assets.