Landlord Question and Answer Forum

I now have 3 rental units ,and am getting ready to add a 4th. I am beginning to have concerns about being underinsured , if a tenant should sue. I have been told that I could incorporate for around $500.00, and am wondering if this would lessen my exposure a bit? Or, should I just raise my insurance on the houses? I only have fire and storm protection right now, but have contacted my insurance agent about getting homeowners policy on each house which will run minimum of $450.00 per year on each house.Im not sure ,even then if the insurance will protect me from lawsuits or not?Any long time Landlords out there PLEASE help !

While creating your investment property as a Corporation and sometimes better yet, as an LLC (Limited Liability Company) does offer some and/or many protections against personal liability, therefore asset protection, usually this must be done before you apply for financing of these properties. Otherwise, you will usually need to re-finance or write for permission from a financier, mortgage holder or bank who holds the note on your property(s) before forming a Corp of an LLC. Each state has it's own criteria. An attorney would better assist in the creation of either one of these entities.

Posted by Denise S, PA on Monday, February 28, 2011