In real estate, the only thing that's truly certain is that in any situation where you own assets, there's always the risk of losing those same assets for whatever reason. This is why real estate asset protection is such a vital necessity to you as a real estate investor - you don't want to be losing the assets and properties that you know you worked hard to acquire. Clint Coons is the Founding Partner at Anderson Business Advisors. Using his experience as a real estate asset protection expert and as an avid real estate investor, he speaks to Marco Santarelli about why getting asset protection should be the top priority of absolutely anyone acquiring assets.

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Asset Protection For Real Estate Investors
Do you take asset protection seriously? The importance of protecting your assets as an investor is completely unparalleled. If you're looking for ways to ensure the success of your real estate business, you have the following tools and options available to you and there are four. The first is debt. This strategy works like this. If you continue to pull the equity out of your existing properties and reinvest that money into new properties, you're building your portfolio, but you're also continually avoiding the excess liquid capital that sits around in your properties. This is a form of protecting yourself because you are not showing that you have equity or wealth. This is otherwise known as equity stripping. Most people will follow through with this strategy by either refinancing their properties to pull that equity out or using a home equity line of credit, also known as a HELOC.

The second tool and option you have available to you are LLCs or Limited Liability Companies widely available in every state in the United States. The benefits of setting up an LLC are almost unparalleled there. They’re next to none. No one will be able to see the assets that are hidden behind an LLC. That's the beautiful thing about having a limited liability company. For one, an LLC will limit your personal vulnerability. When your investment properties are owned by an LLC, your risk exposure would be insulated by the protection of that company or that entity. It will leave only the assets owned by the LLC as opposed to all of your own personal assets exposed to potential lawsuits. The third tool is insurance. This is what most people think about first and foremost. Unfortunately, sometimes they stop thinking about it at that point. Insurance is the easiest way to ensure your real estate assets are protected. That's simply purchase insurance. It is important to have insurance in place for your primary residence, but it's as equally important, if not more important to consider insurance for your rental properties, all of them.

Last but not least, you have trusts. This is an area that a lot of people get a little confused or there's misunderstandings or misinformation about trusts and what they are and how they work. We're going to talk about that with my guest. If your real estate business continues to grow, there's a chance you may end up needing to one-up your real estate asset protection. The debt strategy and insurance can only go so far but eventually, you'll need to consider expanding into trusts, other entities and other structures. A combination of these tools together may be the best option for advanced real estate investors.