Bomb Proofing Assests: Ron LeGrand but I need explanation

[NoMoneyDown]

Theoretically, if someone sues your LLC that holds 'x' number of properties, they can go after ALL the assets in that LLC, too.

A coworker of mine went to the traveling Trump seminar recently and said they basically recommend creating a Limited Partnership for each peice of real estate.  Although my coworker didn't exactly say why they chose an LP and not an LLC (or any other entity).  They then create an LLC, which becomes the managing entity.  And then all of this is put under a Living Trust to avoid much (all?) of the probate issues.  He said they also talked briefly about CRT's (Charitable Remainder Trusts) to park money in that drops your capital gains to -$0-.  The "catch" was buying their system with all the forms specific to your state to set it all up for something like $2,995.

[propertymanager]

NoMoneyDown,

That sounds great in theory, however how much is it going to cost to establish and maintain a trust, a LLC, and a Limited Partnership for each property.  If each of your properties is a 10 unit apartment building, then that might make sense.  However, if you have single family houses that have a positive cash flow of $100 per month, then the cost of these entities alone could wipe out every penny of that cashflow!  That doesn't make sense to me.  You don't have to worry about being sued if your entities drive you out of business.

Mike

[rookieNYC]

My 2 cents..I definitely see where Mike is coming from I also see a bigger issue..Many of the investors here already have assets in need of protection other than the dumpy rentals we are trying to cashflow for coffee money per month..I know myself speaking I'm not concerned about the clapboard piece of crap I'm buying upstate,I'm concerned about my businesses,homes,personal accounts that may be at risk from tenant lawsuits..As it is right now I have something like 10 corporations,1 LLC and a happy accountant and a *few* very happy attorneys..What I have learned is you have to make it into a maze for anyone to get any one item easily..My home is in my wife's name,my business corps are spread out amongst everyone in my family,the LLC etc is in this ones name..Lawsuits are everywhere and people sue over nothing..It's a shame but it has to be this way..I never totally agree with anyones methods fully but the bottomline is you have to do something..To think for years I had tons of stuff in my real name,how incredibly foolish/risky..

[propertymanager]

rookieNYC,

I agree with everything you said.  There is no right or wrong solution to asset protection.  In my case, I currently have many entities but certainly have more than one rental for each LLC.  In my view, the entities should be divided according to risk.  Several nice single family houses in one entity.  A couple of apartment buildings in another.  That way, I can limit the exposure of any one lawsuit to a small number of properties and a few hundred thousand dollars.  I can also make money with my properties and am not sacrificing my profit by operating too many entities.

Mike