The Rookie Guide to Asset Protection: LLCs, Insurance, Partnerships, & Trusts

Real Estate Rookie

BiggerPockets

How To, Education, Business, Investing, Entrepreneurship

4.8 • 1.7K Ratings

🗓️ 14 May 2025

⏱️ 43 minutes

🔗️ Recording | iTunes | RSS

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Summary

Do you really need an LLC for rentals? What about a trust? What kind of insurance should you get? With so many questions (and confusion) surrounding asset protection for real estate investors, we’ve brought on an expert to set the record straight so you can protect your assets—without going overboard or breaking the bank! Welcome back to the Real Estate Rookie podcast! Today, we’re chatting with real estate attorney and fellow investor Bonnie Galam about the nuances of asset protection. The truth is that there are two sides to this coin, but most investors only focus on the defensive or “reactive” side. Bonnie will show you the keys to 360-degree protection—like setting up strong legal structures before problems arise and the essential documentation you should have from day one. You’ll also learn about the potential pitfalls of equity partnerships, how personal events can put your properties at risk, and why car insurance and prenups matter more for your portfolio than you might think. Asset protection doesn’t have to be complicated, but it does need to be strategic, and this episode will help you prioritize what’s important now, what can wait, and how to create a legal framework that evolves as your real estate portfolio grows! In This Episode We Cover Two sides of asset protection to focus on when starting a real estate business Three actionable steps new investors can take to protect their assets today Why you need to create an estate plan (even if you don’t have rentals yet!) How much you should expect to pay for different types of legal protection Debt versus equity partnerships (and why one is better for asset protection) Revocable and irrevocable trusts explained (and which one you need) And So Much More! Check out more resources from this show on ⁠⁠⁠⁠⁠⁠⁠⁠BiggerPockets.com⁠⁠⁠⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠⁠⁠⁠https://www.biggerpockets.com/blog/rookie-561 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email ⁠⁠⁠⁠⁠⁠⁠⁠[email protected]⁠⁠⁠⁠⁠⁠⁠⁠. Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	If you're a new investor wondering when to set up an LLC or how you should protect your assets before you even close on your first deal, or if you are a couple deals in, this episode is for you.
0:13.0	So this is what you can expect to learn today as a rookie investor. First, what asset protection actually means, why it's super important, even if you only have one property,
0:22.7	some simple beginner-friendly steps to protect yourself legally, and what to do now and what
0:28.7	can wait until later.
0:34.4	Today's guest is Bonnie Galam, a real estate attorney, investor, an educator who helps investors
0:40.0	protect their portfolios before problems ever even arise. So Bonnie, welcome to the Real Estate
0:45.8	Rookie podcast. Thanks. I'm excited to be here. So before we get into it, if you're just getting
0:50.9	started and want to avoid the common legal headaches and new investors face,
0:55.6	make sure you hit subscribe so you don't miss any future episodes.
0:59.8	So, Bonnie, before we get into anything else, what is asset protection?
1:05.7	I actually think asset protection is a little bit of a misnomer.
1:09.0	Because if you think about asset protection, the goal is to protect
1:11.9	assets. But there's a lot of things that we as real estate investors want to protect our time,
1:17.5	but also our income, right? Like we're not doing this as a hobby. And so if the work and the income
1:22.7	that is being spun off of our assets isn't also being protected, then we're kind of just spinning our wheels,
1:29.0	right? And so when I think about asset protection, I think of two different forms. I think of
1:33.0	proactive asset protection and reactive, or offense and defense. Defense is usually what you hear
1:38.4	most attorneys or people in forums talking about. It's things like LLCs and insurance. Those
1:45.3	types of asset protection are there for you when something goes wrong, but they're kind of
1:50.0	just floating around in the background unless something goes wrong, right? Whereas on the other
1:54.8	hand, there's a lot of proactive steps that real estate investors can take to protect their bottom line, to protect their
2:02.6	relationships with their partners, their tenants, and all the people that they're interacting
	...

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