You own all your rental property in your personal name, along with your other assets like your house, your stocks, your cash, etc. Well, if one of your tenants sues you (and wins), they would potentially have access to ALL of the assets you have in your name…that’s no bueno!
If you make your living as a freelancer, independent contractor, or own any kind of business, you are always more open to lawsuits. This could be anything like you causing some accident while doing a freelance gig, or committing professional malpractice.
How do we avoid this risk and attain asset protection? You set up “Entities” to hold, and more specifically “silo” your assets. What kind of entity did you ask? Well, for real estate, it usually comes in the form of an LLC (Limited Liability Company).