New Member near Birmingham AL

[Frank Patane]

Hi All!

Just a quick introduction and question.

I am a relatively new real estate investor who just moved to Birmingham AL. I rented out the house I moved from in Gainesville Florida and I bought a turnkey property in Center Point AL.

Here's my question: Is it time to form an LLC? Alabama offers series LLC and I'm hoping I can put the Florida property in as well. I have landlord insurance on both and I just bought an umbrella policy. Alabama insurance doesn't cover mold, and the property I bought was recently an old foreclosure which my turnkey company flipped, but the master bedroom is below level next to the garage and I want to be sure I am protecting my personal assets from any mold issues. (Property and health)

Is an LLC the right tool to use? Any recommended attorneys you have used in the area?

Thanks and you all have great posts I love reading!!

--Frank

[Denise Evans]

An LLC is the best for most people, from an asset protection and estate planning standpoint, and the ability to sell shares to a self-directed IRA. The assets in a self-directed IRA must be passive. The average real estate investment is not passive. BUT, shares in an LLC that owns real estate are passive. As far as protection from mold issues and personal liability, any plaintiffs' lawyer worth his or her salt can draft a cause of action against you personally, no matter what entity holds title to the real estate. Be a prudent landlord, take care of problems as they arise, and have good insurance.

You might want to look at Greg Deitsch at Sirote, Permutt for your legal work. Greg heads the Evictions/Ejectments department, but also does other landlord work. I like Sirote because they have the economies of scale to do routine things efficiently and economically, but also the depth and clout for big problems.  Some lawyers will threaten you with a lawsuit, but then slink away when Sirote says they represent you. The same with other large firms.  On the flip side, a small firm might give you more personalized service, and be more willing to educate you on things you can do yourself, or do to cut down on legal fees. Be sure to ask any lawyer about this issue of education. 

Also, do not be bashful about asking lawyers for proof of E&O insurance. The ones with it will not be offended, any more than my plumber is offended when I ask him for proof of insurance. The ones without E&O coverage will either tell you why they think it is unimportant and allows them to keep their rates down, or they will become indignant and kick you out of their offices. You decide on this issue, but make an informed decision instead of being surprised later.