What is a Series LLC? (Real Estate Investor Guide)
Buying 10 rental properties? You could pay for 10 separate LLCs (expensive), or you could set up just one “Series LLC.” It is the secret weapon for scaling a real estate portfolio without going broke on filing fees.
The “Honeycomb” Structure
Think of a Series LLC like a honeycomb. The main structure holds everything together, but each cell (Series) is sealed off from the others. Honey (assets) in one cell cannot leak into another.
| Feature | Traditional LLC | Series LLC |
|---|---|---|
| Quantity | 1 LLC per Property | 1 Parent, Many Series |
| Filing Fees | Pay 10 Times | Pay 1 Time |
| Protection | Good | Excellent (Isolated) |
| Complexity | Low | High (Banks hate it) |
| Goal | Best Choice |
|---|---|
| 1 Rental | Traditional LLC |
| 3+ Rentals | Series LLC |
Not All States Allow This
This is a relatively new legal invention. Only about 20 states recognize Series LLCs. The most popular ones for investors are:
- Delaware: The gold standard. Courts understand it well.
- Texas: Very popular because it’s cheap ($300).
- Wyoming: Great for privacy (Anonymous ownership).
- Nevada: Good protection, but expensive fees.
Warning: California Investors
If you have 1 Parent + 9 Series, California might send you a bill for $8,000. Be extremely careful.
The Hidden Downside: Banking
Lawyers love Series LLCs. Bankers hate them.
When you walk into Chase or Bank of America and say, “I want to open a checking account for Series B of my Master LLC,” the teller will look at you like you are speaking alien.
Action Step: Before you form one, call your local bank and ask: “Do you support opening accounts for individual cells of a Series LLC?” If they say no, find another bank first.