The dreaded business entity question....

[Travis Limbocker]

BP Gang,

But I am reaching out to my fellow investors to get your input and thoughts on the following scenario:

• Currently own a 6-unit Apartment complex in San Jose, CA held in an LLC formed in beautiful CA
• Own another 6 units across 2 separate properties in Kansas City, MO (KCMO), of which the title is held by myself, my wife, and our partner.
• KCMO properties have $2mil in liability insurance coverage each, with another $5mil over a blanket policy

I tend to agree with the folks on BP who WOULD say, that in this scenario, it's not worth the initial and ongoing costs to establish another LLC for the KCMO properties. I just don't think we're that sophisticated yet, and more importantly, the asset protection for those two properties is covered by liability insurance. I mean, we got a smokin' deal (IMHO) that provides a $5mil umbrella for only $1,300 / year, on top of the $2mil primary policy.

In 2017, we're planning on scaling the business by acquiring at least a few apartment complexes (20+ units) in other states while still living in CA. BTW - I still have a W2 job, most likely for the next 5+ years (CA living expenses make the freedom number a bit larger). 

So, my question is: assuming our RE investments continue to take place out of state, what are everyone's thoughts / suggestions on a proper asset protection / entity structure? 

Loaded question...absolutely. Really just looking for the folks who've taken this path and what your opinions are on protecting yourself through the magic of entities?