Own rentals w/ little equity in my name w/ primary home in Trust?

[Charles Moore]

Hi, all!

I am looking at  acquiring 3-4 properties through a 1031 exchange from an appreciated rental that I have in my own name - I already have that part figured out.

What I am still researching is whether or not to put these in LLCs.

I will most likely be using a turn-key provider to attain more cash flow, hence the new rentals will come with little or no equity. As such, they offer no incentive for a tenant's lawyer to sue me since the banks would get first dibs on anything if the courts forced me to sell. As many BP members point out, that argues for avoiding an LLC at this time and waiting until later in life when more net worth has built up. An umbrella insurance policy should be enough to protect me from tenant slips and falls, the argument goes.

However, I have a lot of equity in my primary residence which I also have in my name, and a tenant's attorney could find that out easily and go after that.

You can't put your primary residence in an LLC, but you can put it in a Trust.

So my question is, would this be the advisable route to go? Own my rentals with little equity in my own name, but keep my equity-heavy primary residence in a Trust to protect it?

As a bonus, I would certainly prefer not having to deal with setting up LLCs and transferring rentals into them and risking the lenders' due on sale clause.