Are Your Rentals Exposing You?
Are Your Rentals Exposing You? Over the past week, I spoke with two clients who each inherited a house recently which they have turned into rentals. For each, it’s their first rental property. Then I found out that they are both holding title to the rentals in their own names. This is not a good idea. If you own rentals, you should consider holding them in a corporate structure (likely an LLC) to isolate the risk associated with them. Let’s say a calamity befalls the rental property – either there’s mold, or a fire, or something that could spark a lawsuit by the tenants against the owner. In that case, everything else you own is put at risk. If you keep the property isolated in an LLC, then the property itself is the maximum risk exposure that you have. Obviously, there’s a lot more that goes into it, but if you own a rental property, get with an estate planner and/or an attorney to make sure you’re set up properly. While I’m neither of those, I own rental properties and I’m happy to chat about how I have mine structured.