Help!! What type of protection coverage is best?

[Missy Stu]

Hi all,

I am so glad I found this forum. I am new to RE investing but have 2 rental investment condos totaling about $80K located in Georgia, and my primary condo in California totaling $350k. They are all deeded and personally financed in my and my husband's name.

My husband and I want to protect our assets, so we are thinking about forming an LLC in Delaware, but after researching, we are hearing that an Umbrella policy may be better for us. Can any experts advise? Thank you!!

[Jon Holdman]

There is no simple answer to this other than to tell you to find a lawyer who specializes in asset protection and get their advice.

If you own properties, you'll need to form an entity in the state where the property is located, or register your entity in that state as a foreign entity.

Umbrella insurance protects you if you're sued.

Having assets in an LLC can help if you get sued as a result of the asset because the plaintiff may be limited from going after your assets outside the LLC.

Having a properly structured LLC can protect the LLC's assets from someone who successfully sues you from taking the assets in the LLC.

Land trusts do little other than to obscure ownership.

Opinions on these topics are varied and often strongly held. If you're truly concerned about this, you really do need to see a lawyer. Your level of concern is directly proportional to your net worth. People sometimes get concerned about asset protection when they actually have very few assets to protect. If those properties are your entire investment portfolio, and they're mortgaged to the hilt you don't have too much to worry about. If they free and clear, and you have other significant assets, spend the money working out a strategy with a lawyer.