I’m opening up the old mailbag and sharing a message that I recently received about operating a rental house business, and my response.
Hi Terry,
Congratulations on the purchase of the new house. It’s good to hear that you were able to follow my advice and turn your old house into a rental instead of selling it.
In answer to your question on LLCs. Generally, LLCs do not provide an impenetrable protective shield against lawsuits, contrary to those who sell and over promote the benefits of these products.
It’s like hiring Gary Coleman to be your bodyguard. You might have some protection from an assault, but probably not enough.
The best protection against lawsuits is a good insurance policy. If you have a good insurance policy and you are sued, your insurance company should defend you and pay for the damages if you lose the case.
(For a more comlete discussion of this topic see the earlier blog article, Protecting Rental Properties: LLC vs. Insurance by lawyer John Gravina.)
If you have any other questions, feel free to contact me again!