[Marcus]

What is the best way to protect real estate?
I have rental properties and I hear some folks say each property should have a separate LLC and bank account, some say just have good insurance policies and an umbrella policy and I’ve heard people say to put in a trust as well.

I got recommended to deed my houses to separate cells in a serious LLC and have the serious LLC be owned by a Wyoming LLC for anonymity purposes.

Thoughts?

[Dew]

Series* LLC. Did you get that from Anderson Cooper? There’s a lot of complex structure you can create to provide the best legal protection.

A lot it is a huge hassle though. How do you scale if every single property needs its own bank account?

Do you ever use credit cards to earn points/cash back? If so, you’d need a separate credit card for each property.

All of that is far too much of hassle. I would put the properties under one LLC just to separate things from your personal assets.

The real liability protections comes form as you said having good insurance policies and an umbrella policy.

If anyone sues you the insurance company will use their own lawyers to defend you.

By the way if you want the owner’s name of a property to be anonymous using a Wyoming LLC, you have to buy the property in cash. Because a bank likely won’t provide a mortgage for the property if it’s in an anonymous LLC.

If you buy the property using a mortgage in your name initially, then quit claim it to the wyoming LLC, there will still be a record for the property originally being in your name.

Plus, there will be the deed of trust from the bank that shows the mortgage is in your name. So, the anonymous thing only works if you buy the house in cash.

[Susan]

Unfortunately, not all (Anderson) attorneys are helpful in each specific market; especially if you don’t pay for another membership of if you are not buying where their partner sells.

I liked the services until I got really frustrated with a few things. Anyway, know your market. I have the series LLCs and the lenders were not happy to lend to a series.

I got these done through Anderson, not knowing those series would be useless and need to pay to keep.

And it seems every market I’m in, people would try to take my properties, maybe intentionally or unintentionally by not doing the work they were hired to do and then cause me to lose money and pay more for certain things (i.e. $100/hour for lawn mowing, really?) or maybe because I’m a woman.

I have more than 20 years of real estate experience and was able to get through some really challenging times (especially during COVID), dealing with tenants and property managers and local real estate laws, etc.

that are not the same as the state I am in.

Even housing standards are different depending on where you invest.

[Stephanie]

We did a trust and put all of the properties in it. The business name is a devalued LLC and that’s what’s on the rental agreement what the tenant sees.

Full insurance on each property and about 3X the value of the homes in an umbrella policy

[Shawn]

It probably depends how much equity you have in each property. If you have low dollar homes with mortgages I think you can definitely have more than one in an LLC.

Definitely get insurance and an umbrella policy. The trust is for estate planning. Having your living revocable trust own your LLCs makes sense.

It won’t save taxes but it allows you to avoid probate when you die. A series LLC really depends on the state.

They make sense in some states and not others. Wyoming has great asset protection laws.

That may or may not help you depending on the strength of the asset protection laws in your home state.

[Taylor]

Honestly I recommend a trust, I know of a really great lawyer who structures them for asset protection.

Let me know if you’d like a referral

[Rob]

Insurance is your best bet. I’ve owned 97 houses over the years and had 44 at one time.

I’ve never been sued. You hear horror stories online, but the worst I’ve heard in my state was a house fire with no smoke detectors, little kids died, and the insurance company paid out 1 million.

Run your business the proper way and have plenty of insurance.

[Jordan]

$1m umbrella policy is like $30 a month. Odds of being sued for >$1M are insanely low, almost impossible unless very negligent or have a large scale building like a warehouse where one catastrophe would harm/kill many people.

Having 30 different bank accounts and LLCs would quickly become a tax nightmare annually as well.

[Matt]

Personally, I have my rentals in one LLC because as previously mentioned keeping everything separate for each rental including credit cards would be burdensome.

Have an 2 million umbrella insurance policy along with individual insurance on each property.

I have my personal assets in a trust.

[Author]

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