Asset Protection for Real Estate Investors
Real estate is one of the oldest and most consistent forms of investing.
When investing in real estate, you should always own the property in a
Limited Liability Company “LLC”. The LLC is ideal for insulating
yourself from being personally liable for any potential litigation tied
to the property and likewise it protects your property from any personal
litigation or liabilities.
The LLC has swiftly risen in popularity since its first appearance in
1977. In addition to limiting liability it's relative ease of administration
and potential tax benefits make it preferable to other options. Ensuring
that you comply with required corporate formalities and applicable laws
are extremely important in maintaining its protective benefits.
If you have multiple real estate investments, we highly recommend splitting
each asset into its own LLC. This will protect the individual property
from potential liabilities from the other properties. If you were to hold
all of your properties under one LLC, a lawsuit incurred with one property
could put the entire portfolio of investment assets at risk.
For an additional layer of Asset Protection, you should create a holding
company to manage all of your separate LLC’s. Having the individual
investment LLCs owned by a management company instead of personally adds
an additional layer of protection as well as consolidates tax filing requirements.
Some people prefer to protect their properties with liability insurance,
but we usually counsel our clients to also own the property in an LLC.
Liability insurance is a smart choice but beware of the fine print contained
in the contracts. Often times there are many clauses and sub clauses which
will deny you coverage. Combining the protection of an LLC with liability
insurance is the best decision.
Finally, if you have significant equity in your properties you may want
to consider equity stripping them. When you encumber your property for
75-80% of its value, you become a less desirable target for potential
litigants seeking to cash in on the property’s value. If there is
little to no equity available, other lawyers are much less likely to pursue the case.
If you have any property in your personal name or are looking to structure
your real estate investments the right please reach out to us for a complimentary
The Presser Law Firm P.A.
6199 N. Federal Highway, Boca Raton FL 33487
(800) 999-9992 or e-mail Info@AssetProtectionAttorneys.com