Experienced Real Estate Lawyer

[Thomas Smith]

I am looking to purchase rental properties outside of the state I live in CA, and looking for a lawyer to assess my situation and provide advice on acquiring The properties via LLC or Trust with umbrella INC. I live In the Central Valley (Tracy) but willing to travel to as far as the Bay Area for a consultation that can't be done via email or phone.

[Steve Buckman]

I want to start by pointing out that I'm not licensed in California to practice law. However, I don't like the use of insurance as the sole protection of your personal assets. I like to use an LLC combined with insurance.

My legal background has been heavily based on insurance coverage and bad faith lawsuits. Therefore, a considerable amount of my legal experience has been litigating whether or not there's really coverage.

In December, I gave a talk to a local REIA group in Tulsa where I practice. One of my points for setting up an LLC involved a legal case decided in Oklahoma.

The facts are pretty simple. A motel had an indoor swimming pool. The heater malfunctioned causing carbon monoxide exposure to guests enjoying the pool. Claims were submitted to the insurer who denied them due to a policy exclusion. The issue was litigated to our Supreme Court who agreed with the insurance company. The court said the insurer had the legal right to include specific exclusions.

Without meaning to sound unkind, most REIs that I see don't read their insurance policies. They don't know what is covered and what is excluded. Not to mention the coverages can change from one year to the next. This doesn't take into account that different insurers write varying types of coverage. When all is said and done, you don't know if there will be covered for whatever arises in the future.

An LLC is your exit strategy when insurance and everything else fails. It's the last means to get out of a "deal gone bad" with your personal assets safely in your possession.

My suggestion is to seek advice from a local attorney about the cost of an LLC. This isn't legal advice and I'm not creating an attorney/client relationship with you. But, sound investing advice (in my humble opinion) means limiting all of the financial risks as best as you are able. And you aren't going to be able to see all of those risks!!!! No one can.

Best of luck with your investing!