what happens if we payoff the rental

3 Replies

all,

thank you for your time...what happens to our legal risk exposure if we payoff one of the rentals. this rental is in our LLC along with another property. if we pay off rental A and it is in the same LLC as rental B, does rental A become subject to legal risk if we get sued from rental B?

@Mike R. your mortgage balance has no bearing on whether or not you can be sued. It means if you are sued and they go after your assets you have all that equity available and up for grabs so to speak. I would look to pull some cash out and buy more real estate. Make your equity and your debt work for you. Short answer is yes. If you are sued for something like negligence on rental B they can go after any equity in rental A as well. First consider the total dollar value of all of your equity (total net worth). Get an umbrella policy sufficient to cover your total net worth. Best of luck to you. 

^^ Yeah, it doesn't matter what the balance of any of the mortgages are.