Iím a new landlord, and I have a question. In the event of a lawsuit, what is the best way to protect my personal assets?
Iíd go with a liability umbrella policy of about two million dollars. This picks up where your liability leaves off on your car, homeownerís and rental property fire and extended coverage policies. Itís not very expensive, either.
If you start to build a substantial portfolio of investment real estate
, such as houses, you might want to begin putting every four or five properties you buy into a separate corporate entity. Iíd advise an LLC, which is a kind of cross between a sole-proprietorship and a corporation. Plus, it has some of the best characteristics of both business types.
Each LLC is a separate company with its own checking account. If you do all the paperwork properly, and an LLC entity owns a property where someone falls and sues you, then they can only sue for the assets of that company.