Asset Protection Plan

[Lucas Love]

I am looking to protect my assets (undeveloped land, primary residence, investment accounts) as I build my rental properties up. I can't put the rental in an LLC as it's already under loan backed by Fannie May.

I thought it would be okay then to just build a wall around my other assets, as well as mitigate risk.

Was planning to put my 100% owned undeveloped land into an LLC, which should give it protection, and also and Land Trust for privacy.

My retirement accounts and my primary residents(in Texas) should already have ample protection.

Was thinking to set up another trust and LLC for my investment accounts, and possibly move offshore.

Then I was thinking for an umbrella insurance policy and risk mitigation techniques like fire extinguisher in rental, evacuation plan, notice about possible hazards, etc. to be put in rental contract.

Am I missing anything?

Thanks in advance.

[Nathan Gesner]

Guys, get real. What are the odds that you'll be sued for $2 million? How about $200,000? Your insurance company is designed to protect you. Actually, they're designed to make money. They give you $300,000 in liability coverage (or whatever your default amount is) because that's more than enough to handle 99.999762% of the lawsuits you'll face.

The most likely reason for being sued? Security deposit disputes. Your exposure is typically no more than 3x the deposit amount.

The odds of actually being sued? Probably like getting hit with lightning . . . twice. I manage almost 400 rentals with 12 years experience and haven't been sued once. I've asked BiggerPockets users and never get a response.

Even if you were sued, you have to lose. 

Even if you lose, it would have to be more than your insurance provider covers. Over 90% of all lawsuits are settled outside of court, which means your insurance company negotiates a payment that is below your liability threshold.

The risk of being sued is low. The risk of losing is low. The risk of losing more than insurance will cover is low.

Know the law. Obey the law. Treat people honestly and fairly. That will go farther than any insurance policy.

If you're still nervous, get a $2 million balloon policy and move on. Stop worrying about something that is unlikely to ever occur.