When you know your company structure will change in the future, it’s best to plan ahead to avoid time-consuming adjustments later. Whether your portfolio will expand, split, or shift in focus, the way you set up your companies now can have a significant impact on how smooth the transition will be later.
Why Planning Ahead Matters
Changing your company structure later often requires closing out existing companies, finalizing accounting, and re-entering property data. This can involve considerable administrative effort, so starting with a structure that aligns with your long-term plans can help avoid these extra steps.
Setting Up for Future Growth or Splits
If you expect that buildings or properties will eventually be owned under separate legal entities (such as individual LLCs), it’s generally best to set them up as separate companies from the start. This approach means:
No need to later close out and recreate companies.
All accounting and reporting remain aligned with the ownership structure.
You avoid re-entering buildings, units, and tenant information later.
Handling Mixed Property Types
For companies managing different types of properties (for example, rentals and properties intended for flipping), it can be useful to set up separate companies for each category from the beginning. This provides clearer financial separation and more accurate reporting.
However, keep in mind:
Our system is designed primarily for rental property management and does not have a quick-transfer feature for moving properties between companies.
If a property changes use (e.g., a flip that becomes a rental), you would need to follow the process for closing out the property in one company and re-entering it into the other.
If minimal accounting is involved for one property type (such as flips), the effort to move them between companies may be manageable.
Key Takeaways
Anticipate future changes to avoid duplicate work.
Set up companies to match your long-term ownership and operational structure.
Be aware that moving properties between companies will require closing them out and re-entering them.
By taking a forward-thinking approach now, you can make future transitions far simpler and keep your operations running smoothly.