Rental Property Business Structures + Asset Protection

[Brandon Lashmet]

Below is the current situation and I would like to get perspectives on the best way to protect a new rental property purchase.

Current Setup:

CA LLC 1 (1 long term rental property)

CA LLC 2 (1 long term rental property)

CA LLC 3 (1 short term rental property)

CA SCORP 1 (Real Estate Business)

New Addition:

4-unit multifamily rental property in Rochester, New York

I've read so many debates about LLCs vs Umbrella Policies for asset protection and not even sure that the annual CA LLC fees are worth it ($800 per year, per LLC).

What's the best way to handle asset protection for the new 4-unit? Merge with an existing LLC, create a new one, maybe just purchase an umbrella policy?

One option that was recommended was to create a Wyoming land trust and\or LLC for better anonymity, but I don't know too much about that.

Any advice appreciated and let me know if any additional information is needed to better advise.

Thank you :)

[Nathan Gesner]

$800 a year to maintain, plus the initial time and cost of setting them up, plus separate bank accounts, etc.

People set up an LLC to separate business assets and protect their private property from a lawsuit. How many Landlords do you know that have been sued for such an amount that insurance didn't cover it, they lost all the equity in their investment property, and then they lost private property? I'll wait right here while you generate that list...

Done? Is it blank? Of course it is.

Insurance companies are in the business of making money, not paying it out. They cover you for $350,000 or $500,000 because they know they'll never pay that out. Even if you were sued for $1 million, it's likely going to be settled out of court for a much smaller amount unless you were egregiously evil or blatantly violating the law.

Don't make your life so complicated. You can put all the properties under one LLC (or no LLC) and buy an umbrella insurance policy of $2 million and things will be easier and cheaper and still protected.