How to Structure an LLC for Commercial Property Ownership
- Nate Jones, CPCU, ARM, CLCS, AU
- Oct 14
- 2 min read
Investing in commercial real estate—whether it’s apartments, office buildings, storage warehouses, or retail property—requires more than just capital. It demands a smart legal structure to protect your assets and streamline operations. That’s where forming a Limited Liability Company (LLC) comes in.
Here’s a step-by-step guide to structuring an LLC for commercial property ownership, along with answers to frequently asked questions.
Why Use an LLC for Commercial Property?
An LLC separates your personal assets from your business liabilities. If someone sues over an incident on your property, only the LLC’s assets are at risk—not your personal savings or home.
Benefits include:
Liability Protection
Pass-through Taxation
Flexible Ownership and Management
Professional Credibility with Lenders and Tenants
Types of LLC Structures for Property Ownership
Ideal for solo investors. Offers simplicity and pass-through taxation. You report profits and losses on your personal tax return.
Best for partnerships. Requires an operating agreement to define roles, profit sharing, and decision-making.
Useful when you want to delegate daily operations to a manager while retaining ownership control.
Steps to Structure Your LLC
Choose a Name: Ensure it complies with your state’s naming rules and includes “LLC.”
Designate a Registered Agent: This person or company receives legal documents on behalf of the LLC.
File Articles of Organization: Submit this to your state’s Secretary of State. Filing fees range from $50 to $500 depending on the state.
Draft an Operating Agreement: Outlines ownership, responsibilities, and profit distribution. Crucial for multi-member LLCs.
Obtain an EIN from the IRS: Required for tax filing and opening a business bank account.
Open a Business Bank Account: Keeps finances separate and maintains your liability protection.
Insurance Considerations for LLC-Owned Properties
Even with an LLC, insurance is essential. Wexford Insurance offers custom commercial property insurance for all types of properties including apartments, office buildings, and storage warehouses.
Coverage includes:
Loss of rents
Equipment breakdown
Business interruption
Final Thoughts
Structuring an LLC for commercial property ownership is a smart move for protecting assets and optimizing operations. Contact Wexford Insurance today to ensure your LLC-owned property is fully covered with tailored commercial insurance solutions.
FAQs
1. Can I transfer an existing property into an LLC?
Yes, but it may trigger transfer taxes or affect your mortgage terms. Consult a real estate attorney.
2. Do I need a separate LLC for each property?
Not required, but it’s a common strategy to isolate liability between properties.
3. Is insurance still necessary if I have an LLC?
Absolutely. An LLC protects your personal assets, but insurance protects the property itself and your income.
