Do you own rental property? Congratulations! You’re well on your way to financial freedom. Now to consider your rental property asset protection safeguards. You’ve probably worked your socks off to get to where you are today. But did you know it could all be wiped out in the event of a lawsuit? As I’ve mentioned many times, setting up an LLC (Limited Liability Company) is just one of the many asset protection strategies you can use. The truth is, LLC lawsuit protection on its own is not a sufficient asset protection strategy. I recommend a multi-pronged approach that creates as many impediments as possible between you and would-be litigants. To that end: Here’s a rental property asset protection checklist to help you protect your investment. Making Your Rental Property Asset Protection Plan Set Up the Right LLC Structure I’ll never tire saying this: Don’t put all your eggs in one basket. That’s the golden rule of asset protection. Have a separate LLC for each property as it does help isolate the properties from each other should liabilities arise. However, it is not a fool-proof strategy as you can still be sued one entity at a time. But you still need to do it. I recommend setting up a series LLC for real estate as it allows you to spread your assets across multiple companies at the expense of a single LLC. Set Up an Anonymous Structure Now for my favorite part – making you an undesirable target to would-be litigants. The first thing an opposing attorney will do before filing a case is to find out whether there are assets to be seized. After all, a judgment on its own is worthless if there is nothing to recover. To show the opposing side that you have nothing worth going after, we hide all your assets using anonymous trusts. The trust will own the LLC making it hard for anyone snooping around to find out what you own. The beneficiary or owner of the trust is not registered with the state. Set Up a Shell Company A shell company owns no assets. You use to conduct business as it’s your face to the world. This is the company you want people to go after if there’s a legal dispute. In fact, all your contracts should explicitly state that this is the company to sue should disagreements arise. Try to Be A Good Landlord and Have a Great Lawyer Nobody cares if you’re a good landlord. If they want your money, you can bet they’ll come for it. Lawsuits usually have very little to do with how good or bad you are. They’re based on misunderstandings and accidents. By all means, follow the law and make your rentals as safe as possible for your tenants. But the best thing you can do is have a good asset protection lawyer by your side. They will be able to guide you on how to set up a foolproof structure for your business.