How do I protect myself from lawsuits

The best way I know of is to do your business in an LLC (Limited Liability Corporation).

If someone sues you, they have to sue the LLC, because the property is under that entity. It will protect your personal assets because an LLC is like a separate person.

If you have more than one property in an LLC they can go after all of them. That shouldn't be much of an issue if you are wholesaling or flipping, because you would be moving them quickly.

If you are buying and holding you would be better off to have an LLC for each property or only keep 3-4 under each LLC. It depends on if you are doing single family homes or multi-family. If multi-family, each unit should have it's own LLC.

I would recommend speaking with your accountant and/or attorney and have them guide you to set up your entities to protect your assets the best way possible with the best tax benefits.

Hope this helps,
Jim

Also an Umbrella Insurance policy works well too, and is fairly cheap. I have a $2M policy for about $400 per year.

One item to note, if you're simply buying a home, there should be no reason for anyone to sue you. I got my umbrella policy because I own multiple properties with tenants, but have never had any issues over 10 years.

I believe an umbrella policy over an LLC is easier (my opinion). Much less paperwork and cost. Plus most banks will not lend directly to an LLC.

- Tom

Is the way to go!