When the investor group decides to acquire a portfolio of real estate investments, creating a new LLC for each property and negotiating the ownership structure of each LLC is cumbersome. A real estate investment holding company structured as an LLC can simplify organization setup and operations.
In this company structure chart, Real Estate Holdings Parent, LLC serves as the umbrella entity. That parent company own 100% of each LLC that owns a property. The real estate portfolio now consists of four properties, each owned by a subsidiary LLC.
This approach introduces an ownership layer to the organization chart, yet simplifies the structure in several ways:
- The investors agree on the allocation of membership interests and responsibilities one time, at the holding company level,
- The tax benefits flow through each layer, and
- There is an addition layer shielding the investors from liability.
The investors can now acquire additional properties with a repeatable structure.
You can read more about real estate investment with limited liability companies.