It’s quite possible you became a landlord by accident. Perhaps you inherited a property that’s currently rented and the idea of owning real estate, cash flowing each month and building wealth wasn’t as mysterious as you thought it would be. So you buy another property and keep it in your portfolio.

You now have two pieces of real estate in addition to your own home and you discover that others are making the mortgage payments, paying the taxes and insurance each month when they send you their rent checks. Later, a duplex drops right in your lap and it’s an opportunity you simply can’t pass up. You’ve acquired a considerable amount of real estate in a relatively short period of time. Are you protected?

Not in the sense of protecting your houses with an insurance policy but are your assets protected from others? Accidental landlords, and any “start up” business usually begin as a sole proprietorship. If this is you, you’re not as protected as you think you are.

Say that you buy a distressed property to rehab and flip so you hire a crew to do the work. After a couple of days, the property’s interior has been all but torn down. Walls are exposed, carpet has been pulled and removed and electric wiring is out in the open, exposed.

A real estate agent who sees that the property will soon be for sale decides to make an unscheduled visit to the project, trips over exposed wiring and falls.Real Estate Asset Protection The agent broke her arm and experienced electrical burns and received a concussion from the fall. You’re being sued and unless you’ve placed your property in a trust, shielding those assets, you could lose all that you’ve gained.

And any actions performed by you or by those you employ can present a liability to you personally unless you form a legal business entity that separates the business from the individual. Business entities include partnerships, corporations and LLCs with each having distinct legal features. When you start your business, whether you have 10 properties or have yet to buy your firs, speak with an attorney to make sure you’re ready for this litigious world. There’s no reason not to. What’s that saying…”An ounce of prevention?”