How to Protect Your Assets as a Real Estate Investor
A common asset protection strategy for a real estate investor is to have one property per LLC. And that makes sense because if you have a law suit with one property, you don’t want it affecting your other assets. That limits your downside risk. So in this situation, we have one LLC with one property held inside of it. We have a completely different LLC with another property held inside of it. This is a great situation if you have a law suit that’s going to involve this property. It’s not going to effect this property. One thing you might do to further increase your protections is to have a corporation which acts as your property management company. This property management company is completely separate from the LLCs, which withhold your assets And because it’s completely separate, if you have a contractor that would sue you, if you have a tenant that would sue you, if you have anybody else that deals with the business of running your real estate company that would sue you, this is the person or the entity that they’re going to be able to sue. They won’t have a claim against your property. And that’s what we want. That protects your credit score from them suing you individually if you ran the business your self and it protects your assets from anybody else getting to them.