Asset Protection - local, large company, or self created LLCs?

[James Ross]

Hello everyone!

I've been looking into asset protection for real estate and I was wondering what everyone prefers to use?  I've spoken with Royal Legal Solutions and similar nation wide companies specializing in real estate asset protection and they seem to provide a good service.  However, it is quite expensive in initial setup ($5-10K depending on what services you're looking for), plus an extra few hundred for each new property added.  Long term, this doesn't sound bad, but I'm just starting out and don't have oodles of cash.  On the other hand, I really really want to do asset protection correctly and have no legal experience myself.

Another option is to look into local asset protection attorneys and see what they offer.  I haven't done this yet but plan to.

And finally, I can set up a series LLC myself and hope I do it correctly, never piercing the corporate veil.

What do you all do, and what did you do when starting out?  I'm looking for recommendations as to whether I should start now with one of the big companies and account for the loan I would need to set up the legal protection in my next property, or if another approach will be better.  Right now I have just the one property, currently held in my name.

Any advice you can give would be appreciated!  I know that most of the people who respond are not attorneys, so the disclaimer "you should definitely talk to a lawyer to be sure of the law" is understood.

[Marcus Auerbach]

You don't need to worry about "legal" asset protection, until you have significant assets to protect. How much is significant? That's debatable, but let's call it 7 figures in equity. Otherwise your juice is not worth the squeeze for an attorney.

But you do have several layers of asset protection, before you get to the whole LLC held in a Delaware Trust thing:

1.) maintain your property, make sure it's safe and well maintained

2.) pick good tenants

3.) make sure you treat your tenants professionally (don't give them a legitimate reason to hate you!)

4.) use a good lease contract (nothing homemade or "typed up" by a local attorney)

5.) maintain good property insurance (your lender will make you), comes with liability

6.) get umbrella insurance that covers the rest up to $1MM

Here is my question: If you do all that, what would have to happen, so a tenant can sue you AND win AND get awarded more than $1MM by a judge? I have not found anyone who could have given me a good answer to that question. Also, I have not seen a case in my 15 years as active investor here in Wisconsin (State law matters) - which does not mean they don't exist, but just not very common.