Creating LLCs to Invest in Paper

[David Piqueira]

I understand that a lot of people prefer to structure their rental entities as LLCs to provide added liability protection. This can be mostly useful in the event of a tenant injuring themselves and trying to sue, as lawsuits related to healthcare can be very expensive.

It also looks like most people investing in paper structure their entities as LLCs. From what I have read, it looks like lawsuits are a part of this business as well, but they are generally comparatively small. It's not like people are going to try to sue you for your entire net worth because you didn't follow the proper foreclosure proceedings (or whatever the lawsuit might be). I am having a tough time thinking about when the liability protection would really come into play in the world of paper investing, so why does everybody form LLCs?