All Forum Posts by: Jeff D.

I think there's probably a lot of landlords who've been sued but you're just not hearing about it.   Are you going to broadcast that you've been sued?   

LLC's are way cheaper than insurance in most states. So why not ?

Doing something wrong has zero to do with getting sued. Too many crazies out there looking for a payday.   In fact, you're going to be named just for being remotely associated.    And sadly, it's not about the crazy lawsuit anyway - it's about  the hopeful settlement that usually happens.   

There are 2 types or origins of lawsuits that should be kept in mind.  The two always get blended together as one in conversations about liability protection,  but are totally different.    Took me a long time to finally wrap my head around it.    

1) Tenants sues LLC. LLC protects you personally, but the LLC's asset (the building) are up for grabs. A personal umbrella policy won't protect your building from being taken.

2) You get sued personally for something (car accident, crazy neighbor, etc). Your personal assets are up for grabs........your personally owned car, house etc. Yes you're llc protects your building. BUT your membership in an LLC is an asset. They can't get the building, but they can get your portion of the membership in an LLC singed over to them. Specifically the income from that portion. In theory, a personal umbrella should protect your LLC membership. Unless it goes over the $1 - 2mil typical limits.

So to me,  if you're a landlord, you're exposed way more than the average person.  So why even hesitate to get way more protected than the average person?   

The lease on a commercial space I have rented for 7 yrs is up for renewal.   Problem is 6 months ago new building owner took over.    He is taking full advantage.   Increasing rent by 20%.    I know I have the leverage of threatening to rent elsewhere,  problem is,  with my biz (laundromat) - elsewhere is a big expensive ordeal that isn't feasible.       So other than bluffing and threatening to leave (even though i really can't),   what other leverage do i have?    

actually i just found out from Venmo - no limit on payments received.   

 I'm trying to figure that out right now with Venmo.   Really want to use it, but i have multiple doors.   However all these limits seem to be limits for Paying people via Venmo,   not Receiving payments - right?

I guess I should have clarified the nature of my questions - i'm focused on the liability protection aspects of a NV or WY property mgmt company.    The tax issue isn't a biggie to me.  I'll deal with whatever the tax implications in order to get the extra liability protection.    So with liability protection in mind,    For people who have property llc's in one state,   and you have a mgmt llc set up in another (WY for example),  how does that work?  Do tenants mail checks to Wyoming?   Do you need a physical address there?    Or can it be a Wyoming llc but operating from the state you have your properties?  It seems a little weird in either circumstance .....

........it's counter intuitive,  but it almost seems like if you held your rental property in your own name it could in fact be better because it's personal property at that point.   And say you have a management company llc.    So if there's a slip and fall at that rental property,  they sue the mgmt llc,  and the member's personal property (the rental property) is protected by the llc.   Right?

All you hear and read about llc's is that they protect your personal assets if your llc gets sued and things go above your insurance limits.   So the slip and fall plaintiff can't get to your house, personal assets, etc.    Phew.  

But the overlooked caveat here is that the property held in the llc is up for grabs.   The llc doesn't protect the property it holds.  It just shields the llc member.    So basically,  if someone sues "the company" the owners are protected, but companies assets aren't .   Oh great.    

And further,   if the owner is sued for something that happens in their personal world,  like a car accident,   I believe the owners share of the llc that holds the property is up for grabs.  ie 100% If you're a single member llc.   Oh great again.   

So I'm feeling like all this talk about "never own a building in your own name,  use an llc,  protect  your personal assets"  is kind of silly.  Because the REAL  "asset protection" needed is protection of the properties themselves.         Because if you are at the level where most or all of your income comes from rental properties, THAT is what you want to protect.   Who cares about your house,  your car,  whatever.........because chances are MOST of your personal wealth and income is in the rental real estate you have held in those llc's.   

And and if you're a decent landlord, and have well maintained properties....odds are you are much more likely to get sued for a personal car accident vs something at one of your properties.    

LLC's only protect from a lawsuit coming from one direction, and it's kind of a slim chance direction.

So if i'm understanding things right....

1) llc gets sued - member's personal property is protected,  rental property is NOT protected.

2) llc member gets sued - personal property NOT protected,   rental property NOT protected

So how can one protect their income producing rental property from being up for grabs in the event of a personal lawsuit that goes beyond their personal umbrella policy??     

 I am literally in the thick of this right now. I really need to decide by tomorrow.  I  have property holding llc's for 3 properties in the state I live (and where they're located).  All single member.   Now need to form the property mgmt llc.   Confused... If I form a Nevada or Wyoming mgmt llc for example,  how does that work in reality?   Do tenants mail their checks to a NV address, or local?  Biz checking account at a NV bank, or local?   etc..... 

I'd love to hear more from others about this part.     Any other single member llc's out there?    I have heard this as well.  But then again, I've heard that as long as you keep everything up to par with the llc's basics  (separate bank acct, current llc status w state,  properly funded,  no co-mingling, etc) it holds up in court even if single member.