What Is Hub and Spoke LLC?
A hub-and-spoke structure puts a Wyoming holding company at the center. That hub owns 100% of each property LLC—the spokes. Each spoke holds one property (or a small cluster). Rent flows from tenants → spoke LLC → hub. The hub holds the equity, distributes to you. A lawsuit on Property 3? It hits only Spoke 3. Your other properties, the hub's cash, your personal assets—untouched. Wyoming delivers charging-order protection, no state income tax, and strong privacy. Cost: roughly $100 formation + $52/year per Wyoming LLC, plus foreign qualification in each state where you hold property. See the Legal Protection guide for the full architecture.
A hub-and-spoke LLC structure is an entity architecture where a Wyoming holding company (the hub) owns multiple property-level LLCs (the spokes). Cash flows up from spokes to hub. Liability stays isolated in each spoke. It's the institutional standard for real estate asset protection.
At a Glance
- Hub — Wyoming holding LLC; owns the spoke LLCs; receives distributions; holds equity
- Spokes — Property-level LLCs; one per property (or small cluster); each foreign qualifies where the property sits
- Cash flow — Rent → spoke → hub → you; liability never crosses spoke boundaries
- Wyoming — Charging-order protection, no state income tax, $100 formation, $52/year annual report
- Institutional standard — How the ultra-wealthy structure multi-property portfolios
How It Works
The architecture. Draw a circle in the center. That's your hub—"Smith Holdings LLC," formed in Wyoming. Draw four smaller circles around it. Those are your spokes—"Smith Memphis LLC," "Smith Nashville LLC," "Smith Columbus LLC," "Smith Indianapolis LLC." Each spoke owns one property. The hub owns 100% of each spoke. Lines go: Property → Spoke → Hub → You. Liability flows the other way: a lawsuit on the Memphis property targets Smith Memphis LLC. The hub's assets (equity in the other spokes, cash reserves) aren't in that lawsuit. The hub protects the hub.
Why Wyoming for the hub? Three reasons. First, charging-order protection—creditors can't force a sale of the hub's assets; they get a lien on distributions and owe phantom income tax. Second, no state income tax—distributions to you aren't taxed at the state level. Third, privacy—Wyoming doesn't require member names on public filings (though the Corporate Transparency Act now requires BOI reports to FinCEN). Form the hub in Wyoming. Form the spokes in the state where each property sits—or form them in Wyoming and foreign qualify in the property state. Either way, each spoke registers where it does business.
Cash flow. Tenant pays rent to Smith Memphis LLC. The spoke pays mortgage, insurance, repairs, property management. Net cash—say $400/month—flows up to the hub as a distribution. The hub aggregates cash from all spokes. You take distributions from the hub. The hub can also hold reserves, pay for shared services, or fund the next acquisition. Liability never crosses. A slip-and-fall at the Memphis property? Smith Memphis LLC is the defendant. Smith Nashville LLC's assets aren't part of the case.
Real-World Example
Elena: 4 properties, hub-and-spoke cost breakdown.
Elena holds four rentals: Memphis, Nashville, Columbus, Indianapolis. She forms "Elena Holdings LLC" in Wyoming—the hub. Cost: $100 filing, $52/year annual report, $50/year registered agent = $202 year one, $102/year after. She forms four spoke LLCs, all in Wyoming: Elena Memphis LLC, Elena Nashville LLC, Elena Columbus LLC, Elena Indianapolis LLC. Each: $100 formation, $52/year, $50 registered agent. Formation: $100 × 4 = $400. Annual: $102 × 4 = $408. Now she foreign qualifies each spoke in its property state. Tennessee (Memphis, Nashville): $300 one-time + $300/year for two LLCs. Ohio (Columbus): $99 one-time + $0/year. Indiana (Indianapolis): $90 one-time + $30/year. Year one total: $202 + $400 + $699 + $99 + $90 = ~$1,490. Year two and after: $102 + $408 + $300 + $30 = ~$840/year. One lawsuit at one property? Contained to that spoke. The rest of her portfolio is firewalled.
Pros & Cons
- Liability isolation — one lawsuit hits one spoke; hub and other spokes are protected
- Charging-order protection — Wyoming hub means creditors can't force asset sales; phantom income tax drives settlements
- Clear cash flow — rent → spoke → hub → you; easy to track, easy to audit
- Scalable — add spokes as you add properties; same structure from 4 to 40
- Lender familiarity — banks understand holding-company structures; series LLC can confuse some lenders
- Cost — multiple LLCs mean multiple formation fees, registered agents, foreign qualification filings
- Compliance overhead — annual reports in every state; calendar the deadlines or miss a filing and face penalties
- Complexity — operating agreements, distribution policies, proper documentation; sloppy structure weakens the shield
- Corporate Transparency Act — every LLC (hub + spokes) files a BOI report with FinCEN; $500/day penalty for non-compliance
Watch Out
Foreign qualify every spoke. A Wyoming LLC holding property in Tennessee must foreign qualify in Tennessee. Operating without registration is illegal—you can lose court standing (eviction case dismissed), face fines, and expose yourself personally. One spoke per property state, registered in that state. No shortcuts.
Don't commingle. The hub's bank account is separate from each spoke. Each spoke has its own account. Rent goes to the spoke, distributions go to the hub. Pay your personal mortgage from the hub account? You've weakened the veil. Treat each entity like it exists. See the Legal Protection guide for compliance requirements.
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The Takeaway
Hub-and-spoke is the institutional standard for multi-property asset protection. Wyoming holding company at the center, property-level LLCs as spokes. Cash flows up; liability stays down. Charging-order protection at the hub level. One lawsuit, one spoke—the rest of your portfolio is firewalled. Cost scales with property count—roughly $200–$400 per property per year including foreign qualification. For 4+ properties across multiple states, it's the structure the ultra-wealthy use. Pair with umbrella insurance. See the Legal Protection guide for the full architecture. For a deep dive on multi-state structuring, listen to the Multi-State Asset Protection episode.