Keeping Clean Accounting Books between Park LLC and Homes LLC

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Starting a new thread on this topic to get some updated opinions on current best practices. When purchasing a park which has fairly high vacancy and will require the infill of 10+ homes, how do you keep the accounting and the contracts clean between the Park LLC and the Homes LLC?

Do you really have the tenants sign two separate leases (lot rent lease with Park LLC, home rent lease with Homes LLC)? Do you have the write two separate checks, or do you have one entity collect and then make a transfer to the other. Do your lenders require any income/expense which is home acquisition and upkeep related to be accounted for solely within the Homes LLC? I’m told that most local portfolio bank lenders are okay to collateralize the park-owned homes, but CMBS and agency lenders will not allow this.

Assuming you have the same partners/members of the Park LLC and Homes LLC, how to you compensate the Homes LLC for a home sale transaction? Many Operating Agreements require contractor arrangements which are arms length, so I could see where this could potentially get sticky.

We’re in the process of structuring this operation for a new park in Arizona, and I’d like to keep it as simplified and streamlined as possible (ie. not overthink the entity structuring). Any input from park owners who’ve done this recently would be much appreciated!

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We have 2 versions of our our leases (a Lot lease for those who own their own home and a home rent+lot rental Lease plus a rent credit agreement for those buying the home form us). We have our tenants sign 1 lease and make 1 payment. Our Homes, LLC is owned by the Park LLC so in Rent Manager we have separate P&Ls under a Property Group. We apply lot rent, home rent and rent credit charges to tenants as appropriate and then do an end-of-month transfer of Home Rent from the Park P&L to Home Rent on the Homes P&L. We allocate expenses for the homes to the Homes P&L and park expenses to the Park P&L. Homes purchases and sales are recorded on the Homes, LLC Balance sheet. We can then run separate P&L and Balance sheet reports to see how each side of the business is doing but also run combined reports for investor and to file taxes, since the ownership is the same and the Homes LLC is a Single-member LLC (the Park LLC is the sole member). Rent manager makes all this easy.

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