Real estate investing comes with many benefits but there are also inherent risks. The risk of liability is one real estate investors should pay close attention to.
Risk of liability exits even for the most conscientious real estate investor. You can be diligent about inspecting your property and making repairs as soon as the need arises, but unknown risks can still be lurking. The most troubling risks are those related to accidents. You can’t anticipate them and they often involve serious damage and / or personal injury. If an accident happens and you, as the property owner, are deemed to be liable be ready for a lawsuit. If the lawsuit includes personal injury, you could be sued to cover medical bills, loss of income, and more.
There are several ways for you to protect your assets and limit your liability. These involve masking ownership – your name and assets are not linked to your property, compartmentalization – putting boundaries around each property and stripping the equity – so there is nothing for the lawyers to go after.
Deciding which option is best for you depends on your goals, tolerance for risk, current needs, and future intentions. Read more here