I have several condos that I been managing for many years. These properties are all in my personal name with Business Insurance. I do not want the hassle and expense of operating an LLC for each individual property. My question is, will it make any sense to manage all these properties inside one LLC as a property manager instead of me and in addition, insuring the LLC in order to minimize my exposure from any potential grievous tenant.
I have several condos that I been managing for many years. These properties are all in my personal name with Business Insurance. I do not want the hassle and expense of operating an LLC for each individual property.
Ok! So you found something that works for you great!
My question is, will it make any sense to manage all these properties inside one LLC as a property manager instead of me and in addition, insuring the LLC in order to minimize my exposure from any potential grievous tenant.
The first Question that springs to mind is, if you’ve been doing things one way for many years why are you thinking about change? If it works for you and there is no specific reason to change why break it?
From what I’ve learned on these boards, a single member llc (you) managing your own properties leaves you just as liable as owning in your own name. A multi-member llc, with agents operating the properties maintains your liability protection.
I went to a Real Estate attorney for a rountine check up and he adviced individual LLC’s for each property or else one LLC to manage them all and to have some asset protection for me.I contacted my insurance agent and he agress with you that it was not worth the trouble or expense. He said that the insurance was my best protection. Who is right?
Insurance will be the best bang for your buck. You can increase the liability portion of the insurance for a very small premium increase. Many insurance companies give you a quote based on around 300k of liability insurance. You can ask them to increase that amount to 500k or 1MM. It won’t cost you a bunch more to do that. I like the peace of mind with the higher amount.
A RE atty will make money off each LLC you set up. That might have had something to do with his answer. Multiple LLCs with multiple bank accounts and extra paperwork seems like too much work IMO.
I agree 100% Prefect solution. I got 1 mil for $675 and a umbella policy for a $380 just in case. Very inexpensive compare to the attorney’s advice. Has anyone had to use the Policy to defend against a law suit from a tenant? Who won and I How much out of pocket did it cost you. I dont know if I have a deductible in my policy.I dont see it stated in my paper work. I appriciate your advice it was extremly usefull. Thanks
Collins,
I agree with Justin and other posters about using insurance for protection.
I have been sued twice–in California, that sue-happy state–by tenants. One suffered a slip-and-fall on an outdoor staircase, one slipped and fell on WET GRASS.
Both cases were defended and settled by the liability insurers on the houses, under the OLT (landlord/tenant) policies. I don’t remember paying any deductible either. The last insurer then canceled coverage, but that’s another story.
$500,000 liability coverage is a bargain for the protection offered.
Furnishedowner
I just acquired my seventh investment property so now I am over the maximum allowed by my umbrella ins. company. Also all the companies that I called don’t allow me to have any commercial business insurance on those properties. My properties are located in Florida. I would appreciate any recommendations for a personal umbrella company with out all these regulations.Thanks
We use Guide One and Foremost for investment property insurance. Guide One is much cheaper for the same coverage, but has a limit of eight properties per entity. Since I didn’t want to create multiple entities, I put the additional properties with Foremost. We don’t have umbrella insurance, but take out the max liability insurance on all of our properties.
You may have special insurance concerns there because of hurricanes too. I’ve heard of companies not insuring NOO properties in FL.
Having liability insurance is definitely a good idea. However any insurance policy has limitations. Having done many years of consulting with insurance carriers, I know that they will find a way to minimize what they pay out per claim.
In some cases, carriers will outright deny the claim and find a sentence in the policy language that would allow them to do this. Then you would get into a costly “coverage dispute” with the carrier (consider the scenario: you with your one attorney vs. a large publicly holded company with legions of attorneys). You will be paying your attorney out of pocket.
In another scenario, the claim would exceed the policy limits. Say you have coverage for $500K but the plaintiff is suing for two million.
There are numerous situations like this. While they might not be likely, it still is a good idea to have that final layer of liability protection that you get by registering and maintaining a business entity (LLC or corporation). Anyone on this forum who says that a single member LLC does not have liability protection is spreading misinformation. Any LLC regardless of the number of members protects those members from personal liability risk. Remember that the LLC protects your personal assets from being used to pay a claim, although the business assets would still be up for grabs.