I thought placing your property in an LLC discourage litigation in the 1st place? Is my logic flawed?
Say Problem Renter A slips on the stairs going up to the house gets injured and decides to consult an attorney.
The attorney see's it is personally owned by you and assumes you probably have an insurance policy and assets worth hundreds of thousands of dollars (insurance, umbrella policy, personal home, retirement accounts, kids college funds, other properties, etc.). He files a lawsuit for $5 million dollars. Even if they are only awarded the value of your umbrella policy or your win outright, you still lost because you had to pay your own attorney's fees and lost countless $ due to the time in litigation.
The lawyer looks at the house and see's it is valued at ~$100k, but leveraged at 75k. If structured properly none of your personal assets are at risk. There is only 25k of equity for him to steal. He tells Problem Renter A it is not worth their time.
You can get a Wyoming LLC for only a couple hundred $/ year. Probably about the same cost as an umbrella policy and you don't have to worry about some judge telling some guy you owe him your life's worth.
I am new to real estate investing, so someone please tell me if my logic is flawed as this is how I intend to own rental properties.