Entity Considerations for Real Estate Activity

Liability protection. Pass-through taxation. Operational flexibility. Easy to transfer interests. Easy to layer into holding company structures.

Distributing appreciated property out of an S-corp triggers gain at fair market value — you can't get the property out tax-free. Mortgages create basis problems S-corp shareholders rarely anticipate.

If property is already in an S-corp, get advice before doing anything else.

One LLC per property maximizes liability isolation but multiplies admin and financing complexity. One LLC for all is simpler but creates cross-property exposure. Most portfolios land somewhere between, often grouped by property type or risk profile.

Above 5–10 properties, a holding LLC owning property LLCs is usually the cleanest structure. Inter-company management agreements, consolidated reporting, and asset protection all work better.

Lenders treat LLC-held property differently than personally held property. Some require personal guarantees regardless. Some won't lend to LLCs. The entity decision interacts with the financing strategy.