Asset Protection – Basics #3

Utah Real Estate Investors Association



In our last article we explained how the LLC can offer great protection for your personal and real estate assets as well as provide some great additional benefits. In this article, I’m going to discuss what you need to get that protection! Here we are talking about the LLC to protect your rental properties!

NOTE: This is a different LLC than you’d use for your flipping, wholesaling and other real estate investing areas! That we’ll discuss in two weeks!

This LLC should be formed correctly, meaning you need to choose the best way to set it up when it’s first created! An attorney can help with those decisions. Then, you need all the critical documents. The most important of which is the “operating agreement.” This is the “constitution” of the LLC and where you get the protection. Without an operating agreement, all you have is a name and no protection. Only an attorney can create this document!

Further, the operating agreement should be prepared by an attorney with asset protection experience. This is not just another business entity. There needs to be a number of clauses in the agreement that provide the specific protections we mentioned in the previous article. This is where the real value of a good attorney comes in. It will be worth it!

Luckily, we also live in Utah where we also have what is called a “Series” LLC. This is a very special kind of LLC that can own multiple properties at the same time while keeping them separate for liability purposes. This saves you a great deal of money as you don’t need to set up an LLC for every rental! You should work with an attorney who is experienced in these kinds of LLCs as they also have very different documents.

The bottom line: As you start out in real estate, use a “Series” LLC for your buy and hold rental properties.

In our next article, I will cover some other more advanced asset protection options. For more information, please see my website link below! I have a ton of free asset protection content.

Jeffrey S. Breglio, Esq.
Breglio Law Office and REI Mastery U
(801) 560-2180


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