Investing in rental properties & liabilities

[Luca Giani]

Hello everyone,

I am planning the purchase my first rental property out of state (most likely in Cleveland) and I am aware of all the risk involved in this type of venture when we talk about financials.

Beside that, what are the possible legal liabilities involved?

I am just trying to figure out a possible worst-case scenario...

Thanks!

[Stephen J Davis]

Congrats on your decision to start building wealth with real estate. There are three layers of protection for you.

1. Management style
2. LLC
3. Insurance

Guess which one is the most important.....management style. Focus on how you are here to serve the tenant. Keep the property in perfect shape and take care of maintenance immediately when you get a call. Think of this as the "ounce of prevention."

Insurance is the "pound of cure." If you do something stupid (don't repair a sidewalk) and get someone hurt, make sure you have $300,000 liability insurance on each house and a $1 million umbrella policy over all of your property.

I do not use an LLC on single-family but you could in some rare cases.

Make sure that you take a course on property management even if you are letting someone else manage them. You are responsible to know.