Single LLC for All Properties: Balance Between Protection and Simplicity

A single LLC for all properties provides liability protection while maintaining pass-through taxation, though it may not fully isolate each property's risk.

You have liability protection -- but it is shared. An LLC creates a legal barrier between your rental properties and your personal assets. If a tenant sues, the claim is against the LLC, not you personally. However, with all properties in one LLC, a judgment against that entity can reach every property inside it. One bad lawsuit could put your entire portfolio at risk.

Tax treatment is straightforward. A single-member LLC is treated as a disregarded entity by the IRS, meaning it does not file its own return -- income and expenses flow through to your Schedule E just as if you held the properties personally. A multi-member LLC files as a partnership and issues K-1s. Either way, the entity itself pays no federal income tax.

Charging order protection. In most states, a creditor who wins a personal judgment against you cannot seize LLC-owned property directly. They can only obtain a charging order, which entitles them to distributions if and when the LLC makes them. This is a meaningful layer of asset protection that holding in your personal name does not provide.

The tradeoff: A single LLC is better than no entity at all, but it creates a single point of failure. If your portfolio grows beyond two or three properties, the liability isolation of separate LLCs per property becomes increasingly worth the additional filing overhead.