So I just paid off a 3 unit building I own, and now want to make sure I protect my asset(s) as well as hopefully enable myself to draw out some of the equity in the property for reinvestment in another property. I'd really appreciate any advice someone might have as to the proper sequencing....should I try to pull cash out before an LLC formation? Will this be more difficult if I form the LLC first? Do I need to form an LLC or is just an umbrella policy adequate? I always have and intend to continue managing/maintaining the property myself, and have read that doing so negates many of the potential benefits of an LLC. Most importantly though I don't want to do anything that will make it more difficult to pull out some of the equity, as I am anxious to leverage that equity into more properties. Thanks
You should always have your properties in LLCs. Because it will protect your other assets. However, if you are negligent, a good attorney can still pierce the LLC and go after you. That rarely happens and it would have to be if a tenant seriously was hurt.
Your bank should be okay with lending to an LLC, but for a smaller building, you most likely will have to have a full-recourse loan.
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