Hold each Investment Property as an LLC

Many wonder if it is necessary to hold or transfer their investment properties in an LLC. I think it is not only necessary, but you should have a separate LLC for EACH investment property. This is especially true if you have multiple apartment buildings with many units.

The whole idea is to protect your personal assets from potential lawsuits from tenants, etc. If you hold all of your investment properties under your name, then that leaves you open for getting sued for your personal assets (bank accounts, principal residences, etc). This can be devastating for most and I have seen a few people get burned this way. I don't even think it is a good idea to have all of your investment properties under one LLC. The problem with this is if someone sues you because of an incident at Apartment Building #1, they can also go after the equity and assets of Apartment Building #5 if they are under the same LLC. You will be personally protected, but you open yourself to potential liability with your whole real estate investment portfolio.

Another good option, would be to get personal umbrella insurance. A yearly premium of a couple of hundred dollars can protect your personal assets for millions of dollars. It is relatively cheap and offers great protection.

As always consult your tax planner, insurance agents, and lawyer (if you have one) to see if these options can meet your personal needs.