How do you protect your properties?

[Peyton LaBarbera]

Let's say I have 3 fix and flips going on at the same time and I want to make sure each property is protected now of course I have all of the proper insurance I need but what about keeping each property separate from each other?

Now I have two different ideas... the first is to set up each property with its own LLC and the second idea is to set up one LLC and inside this LLC a title-holding land trust for each of the properties this way after each flip I don't have to keep setting up and closing an LLC

Let me know your guy's thoughts on this situation,

Thank you.

[Stuart Udis]

In your example I see no reason why each cannot be owned by the same LLC. An LLC is perfectly suitable as long as the LLC is operated properly. The reason why this may not work is more tied to your investor and banking relationships rather than from a liability perspective. If you have different investors involved in the various projects who each have membership interest, this would require separate LLC's and in some instances if different lenders are involved they may not want other lenders collateralizing assets titled to the same LLC. However this is more circumstantial and may not apply to your situation.

My suggestion is to focus more on the operations of your business. This is truthfully the best way to protect yourself. 

1. This means making sure you are signing contracts between yourself and the GC and are keeping track of subcontract agreements between the GC and the subs. 

2. Maintain builder risk and general liability insurance. 

3. Collect insurance certificates from everyone who is providing services where you are listed as a certificate holder.

4. Collect lien waivers (especially if the payments are passing through an intermediary GC).

5. Maintain a strong physical presence at your job sites ensuring dangerous conditions do not exist or are remedied quickly to avoid premises liability exposure. This means ensuring the property or the site are secured and right of ways are clear of debris or any tripping hazards.

6. Lastly, if you have a question about a condition on site, have the architect or engineer come out to inspect and issue a report on findings and suggested action plan.

If you consistently complete these steps you will be far better protected than the person who has the most elaborate web of entities but performs their duties irresponsibly.