Owning rental property in your own name is not a good idea. Landlords face increased levels of liability compared to somebody who say, invests in bonds, or something like that. So why is it a bad idea? Check out the video for more info.
Colin Ley is a Seattle asset protection attorney. He is also the co-founder of LayRoots along with his wife, Shreya.
Protecting Rental Property Video Transcript
Hi. Colin Ley here with LayRoots, and I want to talk to you about owning rental property in your own name. So I get a lot of questions about whether that’s a good idea or not, and I tell people no. It’s not a good idea to own rental property in your name, and the reason is that it is a, what you call, hot asset. So a lot of lawsuits and disputes arise from owning rental property.
Say here’s your rental property, and then you got other things like your personal residence, your bank accounts. Couldn’t draw a bank on the fly, but that’s a bank, and your accounts are in them, and basically all of your other assets. So when you own a rental property in your name, the same name that you own all of these other assets, essentially if there is a claim, lawsuit, something happens at your rental property, a slip and fall, environmental claims, in Seattle we have a bunch of lead in the water, maybe somebody commits a crime on the property.
That liability can come out and go after everything that’s in your little personal name bubble. And by that I mean lawsuits and judgments in lawsuits. So if you end up owing somebody money, creditors can go after all of these assets that are in your name in order to pay that judgment.
But do some basic planning ahead of time. If you put this rental property in some sort of protective entity, like an LLC, that takes it out of your name and all of these little claims get stuck here in the box in your LLC, for example, and creditors from the liabilities or from any judgments from that, they’re not going to be able to get after your home, bank accounts, other assets, that sort of thing. So that’s why it’s important to not own rental property, investment properties, in your name. If you have any questions, let me know. Reach out to us or … Yeah. There you go. That’s all I’ve got today. Take care. Bye.