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Updated about 9 years ago,
asset protection for Rental Properties 1 LLC? or Many individuals
I'm looking at buying several properties (8-10) in a lower income area of Baltimore Maryland for cash as a retirement income plan. The area cash flows very well. My concern is with litigation mainly from tenants.
I was thinking about this senerio. I would create a single member llc for each property that I purchased for example 123 main st , llc then each LLC would be owned by another single member LLC let's call it MyMain, LLC.
I was also thinking about recording a large lein/mortgage/judgement against the mymain LLC to further judgement proof the rentals and myself
My thinking would be that if some sued 123 Main St , LLC worst case is they would get a judgement only against that LLC which only owns 1 house.. The prior recorded mortgage/lein against Mymain , llc would have priority since it was recorded at the purchase of the propery. So Mymain, llc would get paid on the sale of the property owned by 123 main LLC before any judgment would be paid.
My questions:
1. Does this seem like it would work for asset protection?
2. Would I be okay recording a lien against the Main LLC (MyMain, LLC) or should I record a lein/mortgage against each property individually?
3. Since I would own My Main LLC as a single member and each of the 8-10 property's llcs would be single member llcs owned by MyMain, LLC would everything be considered disregarded entities in the eyes of the IRS for easier taxation and filling?
4. What ways would a plaintiffs attorney try to get at my other assets? Basically what argument could they make?
I know this sounds like I'm going a bit overboard but I'm looking at investing the only $500,000 I have saved for retirement into these rentals and will be renting to section 8 tenants that like to "work" the system anyway. That the all the houses were built in the 1920s and there have been quit a few huge lead paint lawsuits won by poor section 8 tenants against landlords in the area.
Thanks for any input
Justin