e away as did the 8-track tape and the Beta video system. With the Series LLC you can have privacy and protection in one entity.

• Using the Series LLC won’t make sense if there are a large number of un-related parties – because the flow-through considerations might be quite a burden to your accountant. After all, simplicity is what’s behind the new Series LLC. Real estate investors will want to take advantage of the Series LLC as a preferred form of property ownership, particularly where the LLC members are single owners, married couples, maybe a family trust or a family limited partnership.

• After your Series LLC is registered and the Members have signed the Operating Agreement, be sure to then sign separate ‘Series Agreements’ for each cell they choose to use. All future transactions should reflect that particular series’ name so that you reinforce the ‘separate’ quality of each of the series units or ‘cells’. As long as the revenue and expenses are separately a

There is a national trend developing. Today, more LLCs are being formed in the USA than corporations.

Necessity, it is said, is the mother of invention. Given the simplicity, protection and flexibility of the Limited Liability Company (‘LLC’), some states have begun to adopt the new ‘Series’ form of LLC. Starting 10 years ago with the concept of ‘cell’ captive insurance companies used offshore, the states of Delaware, Nevada, Oklahoma, Iowa, and now Illinois have embraced the new ‘Series’ LLC. It may be very well-suited for certain types of business and investment holdings -- such as multiple income-producing real estate, aircraft leasing, container vessels such as tankers and cargo ships, franchise business enterprises (i.e. multiple fast food stores), trucking and transportation fleets, and companies having operating divisions that need to enhance the liability shield to better protect one portion of the business activity from another.

THE CONCEPT MAKES SENSE.

Use of multiple LLCs for property owners is a conservative and safe way to go. However, instead of registering a traditional LLC, forming a new ‘Series LLC’ may be a smarter way to go for real estate investors. The concept is simple. It’s based on the model of the Cell Captive Insurance Company used in other countries.

Even though one LLC ‘mother ship’ entity is formed, each separate cell within it (called a series) can be separately accounted for, and each can own assets and operate as a separate business enterprise. The idea behind the legislation is that the liability of one cell does not infect the others so long as guidelines are followed.

So now, instead of using land trusts or numerous traditional LLCs, a less expensive option may be to hold several rentals or fix-and-flip properties in one Series LLC –giving each cell within it a separate business designation, i.e. ‘Valley Properties LLC Series I or Series II or Series III’ or ‘Valley Properties LLC Series A or Series B or Series C’ for example. This simplifies formation and reduces legal and tax costs, since only one registration is made with the state and one single consolidated tax return is prepared. To keep the paperwork clean, each series will need to separately identify itself as distinct from the others in all business and tenant transactions -- including lease and rental agreements, deposits, bank accounts etc. in the name of that particular series as opposed to the ‘mother ship’ LLC or any of the other series. Of course, it will need to register as a ‘foreign’ company in any other state in which it holds properties - but only once.

WORKING THE NUMBERS.

Real Estate investors ‘work the numbers’ every day. Acquiring an investment property, doing fix-up, advertising and insuring the property, attracting stable tenants, maximizing the tax advantages and working the cash-flow management are all part of how you build a portfolio of income-producing real estate. To save costs, rather than paying for multiple ‘traditional’ LLCs, consolidating through a single ‘Series’ LLC can offer significant cost savings.

Let’s consider one case example. If an investor has 20 properties and uses the new Series LLC, even if the franchise tax is applied the savings in multiple entity formation costs and tax preparation may be significant. The difference could be better spent on acquiring more income-producing rental properties and marketing for new paying customers, don’t you think?

WHAT ELSE TO CONSIDER ? • The Illinois-type Land Trust (sometimes called the ‘Real Estate Privacy Trust’) is effective for protecting privacy and avoiding probate, but it is not a liability shield. It is only a ‘privacy mask’. Some real estate investors in the past have used multiple real estate privacy trusts built around LLCs to save franchise tax fees but now that the Series LLC has arrived, that practice will fade away as did the 8-track tape and the Beta video system. With the Series LLC you can have privacy and protection in one entity.

• Using the Series LLC won’t make sense if there are a large number of un-related parties – because the flow-through considerations might be quite a burden to your accountant. After all, simplicity is what’s behind the new Series LLC. Real estate investors will want to take advantage of the Series LLC as a preferred form of property ownership, particularly where the LLC members are single owners, married couples, maybe a family trust or a family limited partnership.

• After your Series LLC is registered and the Members have signed the Operating Agreement, be sure to then sign separate ‘Series Agreements’ for each cell they choose to use. All future transactions should reflect that particular series’ name so that you reinforce the ‘separate’ quality of each of the series units or ‘cells’. As long as the revenue and expenses are separately ac

NSE.

Use of multiple LLCs for property owners is a conservative and safe way to go. However, instead of registering a traditional LLC, forming a new ‘Series LLC’ may be a smarter way to go for real estate investors. The concept is simple. It’s based on the model of the Cell Captive Insurance Company used in other countries.

Even though one LLC ‘mother ship’ entity is formed, each separate cell within it (called a series) can be separately accounted for, and each can own assets and operate as a separate business enterprise. The idea behind the legislation is that the liability of one cell does not infect the others so long as guidelines are followed.

So now, instead of using land trusts or numerous traditional LLCs, a less expensive option may be to hold several rentals or fix-and-flip properties in one Series LLC –giving each cell within it a separate business designation, i.e. ‘Valley Properties LLC Series I or Series II or Series III’ or ‘Valley Properties LLC Series A or Series B or Series C’ for example. This simplifies formation and reduces legal and tax costs, since only one registration is made with the state and one single consolidated tax return is prepared. To keep the paperwork clean, each series will need to separately identify itself as distinct from the others in all business and tenant transactions -- including lease and rental agreements, deposits, bank accounts etc. in the name of that particular series as opposed to the ‘mother ship’ LLC or any of the other series. Of course, it will need to register as a ‘foreign’ company in any other state in which it holds properties - but only once.

WORKING THE NUMBERS.

Real Estate investors ‘work the numbers’ every day. Acquiring an investment property, doing fix-up, advertising and insuring the property, attracting stable tenants, maximizing the tax advantages and working the cash-flow management are all part of how you build a portfolio of income-producing real estate. To save costs, rather than paying for multiple ‘traditional’ LLCs, consolidating through a single ‘Series’ LLC can offer significant cost savings.

Let’s consider one case example. If an investor has 20 properties and uses the new Series LLC, even if the franchise tax is applied the savings in multiple entity formation costs and tax preparation may be significant. The difference could be better spent on acquiring more income-producing rental properties and marketing for new paying customers, don’t you think?

WHAT ELSE TO CONSIDER ? • The Illinois-type Land Trust (sometimes called the ‘Real Estate Privacy Trust’) is effective for protecting privacy and avoiding probate, but it is not a liability shield. It is only a ‘privacy mask’. Some real estate investors in the past have used multiple real estate privacy trusts built around LLCs to save franchise tax fees but now that the Series LLC has arrived, that practice will fade away as did the 8-track tape and the Beta video system. With the Series LLC you can have privacy and protection in one entity.

• Using the Series LLC won’t make sense if there are a large number of un-related parties – because the flow-through considerations might be quite a burden to your accountant. After all, simplicity is what’s behind the new Series LLC. Real estate investors will want to take advantage of the Series LLC as a preferred form of property ownership, particularly where the LLC members are single owners, married couples, maybe a family trust or a family limited partnership.

• After your Series LLC is registered and the Members have signed the Operating Agreement, be sure to then sign separate ‘Series Agreements’ for each cell they choose to use. All future transactions should reflect that particular series’ name so that you reinforce the ‘separate’ quality of each of the series units or ‘cells’. As long as the revenue and expenses are separately a

erties LLC Series A or Series B or Series C’ for example. This simplifies formation and reduces legal and tax costs, since only one registration is made with the state and one single consolidated tax return is prepared. To keep the paperwork clean, each series will need to separately identify itself as distinct from the others in all business and tenant transactions -- including lease and rental agreements, deposits, bank accounts etc. in the name of that particular series as opposed to the ‘mother ship’ LLC or any of the other series. Of course, it will need to register as a ‘foreign’ company in any other state in which it holds properties - but only once.

WORKING THE NUMBERS.

Real Estate investors ‘work the numbers’ every day. Acquiring an investment property, doing fix-up, advertising and insuring the property, attracting stable tenants, maximizing the tax advantages and working the cash-flow management are all part of how you build a portfolio of income-producing real estate. To save costs, rather than paying for multiple ‘traditional’ LLCs, consolidating through a single ‘Series’ LLC can offer significant cost savings.

Let’s consider one case example. If an investor has 20 properties and uses the new Series LLC, even if the franchise tax is applied the savings in multiple entity formation costs and tax preparation may be significant. The difference could be better spent on acquiring more income-producing rental properties and marketing for new paying customers, don’t you think?

WHAT ELSE TO CONSIDER ? • The Illinois-type Land Trust (sometimes called the ‘Real Estate Privacy Trust’) is effective for protecting privacy and avoiding probate, but it is not a liability shield. It is only a ‘privacy mask’. Some real estate investors in the past have used multiple real estate privacy trusts built around LLCs to save franchise tax fees but now that the Series LLC has arrived, that practice will fade away as did the 8-track tape and the Beta video system. With the Series LLC you can have privacy and protection in one entity.

• Using the Series LLC won’t make sense if there are a large number of un-related parties – because the flow-through considerations might be quite a burden to your accountant. After all, simplicity is what’s behind the new Series LLC. Real estate investors will want to take advantage of the Series LLC as a preferred form of property ownership, particularly where the LLC members are single owners, married couples, maybe a family trust or a family limited partnership.

• After your Series LLC is registered and the Members have signed the Operating Agreement, be sure to then sign separate ‘Series Agreements’ for each cell they choose to use. All future transactions should reflect that particular series’ name so that you reinforce the ‘separate’ quality of each of the series units or ‘cells’. As long as the revenue and expenses are separately a

income-producing real estate. To save costs, rather than paying for multiple ‘traditional’ LLCs, consolidating through a single ‘Series’ LLC can offer significant cost savings.

Let’s consider one case example. If an investor has 20 properties and uses the new Series LLC, even if the franchise tax is applied the savings in multiple entity formation costs and tax preparation may be significant. The difference could be better spent on acquiring more income-producing rental properties and marketing for new paying customers, don’t you think?

WHAT ELSE TO CONSIDER ? • The Illinois-type Land Trust (sometimes called the ‘Real Estate Privacy Trust’) is effective for protecting privacy and avoiding probate, but it is not a liability shield. It is only a ‘privacy mask’. Some real estate investors in the past have used multiple real estate privacy trusts built around LLCs to save franchise tax fees but now that the Series LLC has arrived, that practice will fade away as did the 8-track tape and the Beta video system. With the Series LLC you can have privacy and protection in one entity.

• Using the Series LLC won’t make sense if there are a large number of un-related parties – because the flow-through considerations might be quite a burden to your accountant. After all, simplicity is what’s behind the new Series LLC. Real estate investors will want to take advantage of the Series LLC as a preferred form of property ownership, particularly where the LLC members are single owners, married couples, maybe a family trust or a family limited partnership.

• After your Series LLC is registered and the Members have signed the Operating Agreement, be sure to then sign separate ‘Series Agreements’ for each cell they choose to use. All future transactions should reflect that particular series’ name so that you reinforce the ‘separate’ quality of each of the series units or ‘cells’. As long as the revenue and expenses are separately a

e away as did the 8-track tape and the Beta video system. With the Series LLC you can have privacy and protection in one entity.

• Using the Series LLC won’t make sense if there are a large number of un-related parties – because the flow-through considerations might be quite a burden to your accountant. After all, simplicity is what’s behind the new Series LLC. Real estate investors will want to take advantage of the Series LLC as a preferred form of property ownership, particularly where the LLC members are single owners, married couples, maybe a family trust or a family limited partnership.

• After your Series LLC is registered and the Members have signed the Operating Agreement, be sure to then sign separate ‘Series Agreements’ for each cell they choose to use. All future transactions should reflect that particular series’ name so that you reinforce the ‘separate’ quality of each of the series units or ‘cells’. As long as the revenue and expenses are separately accounted for (perhaps using Quicken® or QuickBooks®) and one single consolidated tax return is prepared, the fact that multiple properties are under the umbrella of one ‘mother ship’ (sub-designated as Series One, Series Two, etc.) it makes it easy to track revenues, costs, tenants, fees, property taxes and profits of each Series.

WHERE SHOULD I FORM MY SERIES LLC ? About seven (7) states so far have adopted the Series LLC. However, four (4) other states have adopted legislation which strictly limits creditors of LLCs to a ‘sole legal remedy’ known as the ‘charging order’ (a passive lien on distributions). However, of all the 50 states only Nevada has done both. Once your new LLC has been formed, if you’re going to use it in another state, simply register it as a ‘foreign’ (out-of-state) company with that secretary of state’s office. Once it is registered to do business, we can show you the smart way to guard your liability risks and lawfully manage your tax costs so that you have more to put into your retirement accounts for the future.

Afterwards, in your business transactions, be sure to have each individual Series clearly distinguished from the others. Treat it as a separate business. Consider having each series use separate brokers, separate lenders, and maybe different banks just to make it clear they are separate. Rental agreements and all other paperwork will need to reflect the series designator so that it’s clear the tenant is not doing business with the LLC ‘mother ship’ but rather with one particular Series as a distinct business enterprise.

LOOKING AT THE 'BIG PICTURE'.

Forming an LLC to hold investment property is a positive step in the right direction. However, it’s one step. Keep the ‘big picture’ in mind: what are you trying to accomplish by investing in real estate in the first place? You’re trying to build – and preserve – secure wealth that gives you cash flow and a future for your loved ones. Keep in mind that each property you acquire is part of a building process that is dynamic. You are using a system to find, acquire and finance each property. Use the tools that empower you and don’t be overwhelmed by the small details that can sidetrack you if you let them. Use professionals for tax preparation, property acquisition and finance, and keeping adding to your portfolio with focus and discipline. Use professional advisors as a support system but remember they work for you so that you can enjoy what you do best -- acquiring more income producing real estate.