Hi BP folks - newbie here from California (Bay area) & looking to learn from you all here!
My situation: Started slow with real estate investing (turnkey) and own a couple of properties. Things seem to be going on and I plan on expanding my RE portfolio.
My concern: I have heard of cases where owners get sued by tenants' attorneys and the damage/cost can get pretty hefty and eat into your personal savings. (not sure how frequently this happens but nevertheless a concern)
My question: How do I protect myself/wealth from lawsuits?
I've seen other posts and a lot of discussions have gone in circles. Hoping to get some clarity
Also - I was approached by a reputable establishment and they suggested the following structure:
Creating an overarching LLC and creating a Land trust for each property owned. Seems like an interesting option but also seems expensive.
This is exactly what my lawyer proposed as well. I have made the choice of getting umbrella insurance on my properties just to protect myself because I have mortgages on them. If I want to put them in an LLC, the mortgage company has to approve that which is not always possible from what some of the investors shared.
I got an umbrella policy on all my properties here in the Bay Area as well as Ohio
1. Common eg. that many people quote: Let's say the tenant is injured in the property and decides to file a lawsuit against you does umbrella insurance help in this scenario?
2. Parikh - to your point, is it not possible to first buy the property and then transfer to the LLC?
1. The umbrella insurance will help you protect the property that the tenant resides in. The tenant won't be able to come after your other assets. And the umbrella insurance provides more protection.
2. If you get a loan on it, then the bank is giving you a loan based on a individual ownership vs when you buy with an LLC, you are trying to get a mortgage based on your business so the financing is different. So the banks usually don't allow transfer to LLC if you bought the property under your name.
Thanks @Aj Parikh ! Appreciate your response.
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