One Easy Step for Asset Protection

You've worked hard to build your rental portfolio. Maybe you started with a duplex in Cleveland, added a single-family home in Columbus, and now you're eyeing something in Cincinnati. It feels great watching that passive income roll in, right?

But here's a question that might keep you up at night: What happens if a tenant slips on an icy sidewalk at one of your properties and decides to sue? Could that one lawsuit wipe out everything you've built, including properties that had nothing to do with the accident?

If you're holding multiple rental properties in your personal name or lumping them all into one LLC, the answer might be yes. And that's why we need to talk about asset protection in Ohio and why the one-property-per-LLC approach deserves a serious look.

The Problem with Holding Properties in Your Personal Name

A lot of Ohio real estate investors start out by putting properties in their own name. It's simple, it's cheap, and honestly, when you're buying your first rental, you're not always thinking about worst-case scenarios.

But here's what can happen:

Let's say a tenant's guest trips on a broken step at your rental property and suffers a serious injury. They sue you. Because the property is in your personal name, they're not just suing "the property", they're suing you. That means everything you own is potentially on the table: your primary residence, your savings, your other rental properties, your life savings.

One bad accident. And suddenly your entire financial life is at risk.

This is why asset protection in Ohio matters so much for real estate investors. It's not about being paranoid, it's about being smart.

Why One LLC Isn't Enough

Okay, so you're thinking, "I'll just put all my properties into an LLC. Problem solved!"

Not quite.

When you put multiple properties into a single LLC, you're basically tying them all together. If a lawsuit arises from Property A, the plaintiff can potentially go after the equity in Property B, Property C, and every other property sitting inside that same LLC.

Think of it like putting all your eggs in one basket. Sure, the basket offers some protection from the outside world. But if something goes wrong inside the basket, all the eggs get cracked.

This is where the concept of "commingling" comes in, and it's a bigger deal than most people realize.

The Danger of Commingling Assets

Commingling happens when you mix assets together in ways that make them legally indistinguishable. For real estate investors, this usually shows up in two ways:

1. Mixing personal and business assets. Using your personal checking account to pay for property repairs, or depositing rent checks into your personal account, can blur the line between you and your LLC. If a court decides you've treated your LLC like an extension of yourself rather than a separate legal entity, they can "pierce the corporate veil" and hold you personally liable anyway.

2. Mixing properties within a single LLC. When multiple properties share one LLC, a creditor with a judgment against the LLC can potentially satisfy that judgment from any asset the LLC owns, not just the property where the problem originated.

The solution? Keep things separate. Separate bank accounts. Separate record-keeping. And ideally, separate LLCs for each property.

The One-Property-Per-LLC Approach

Here's how it works: You create a separate LLC for each rental property you own. Property A goes into LLC #1. Property B goes into LLC #2. And so on.

Now, if something happens at Property A, the liability is contained within LLC #1. The plaintiff can only go after the assets of that specific LLC, which is just that one property. Your other properties, held in their own separate LLCs, are protected.

It's like building firewalls between your investments. One fire doesn't have to burn down the whole building.

Is it more paperwork? Yes.  More expense to set it all up the right way? Also yes. But when you're talking about protecting hundreds of thousands of dollars (or more) in real estate equity, the extra work is worth it.

Getting the Deeds Right Matters

One thing we see all the time: investors who set up their LLCs correctly but mess up the deed transfers. If the deed still shows your personal name, or shows the wrong LLC, you haven't actually moved the property into the protective structure.

Real estate deeds in Ohio have specific requirements. The deed needs to be properly drafted, signed, notarized, and recorded with the county recorder's office. Even the size of the margins matter. Get any of those steps wrong, and you might think you're protected when you're really not.

This is one of those areas where working with an attorney who focuses on real estate deeds and asset protection can save you from costly mistakes down the road.

The Bottom Line

Your rental properties are assets: valuable ones that you've worked hard to acquire. But without the right legal structure, a single lawsuit could put everything at risk. Placing each Ohio rental property into its own LLC creates a liability firewall that protects your other investments.  It's not about being lawsuit-happy or paranoid. It's about being a smart, strategic investor who plans for the unexpected.

If you're ready to talk about protecting your rental portfolio, reach out to us. We'd love to help you build a structure that lets you sleep better at night, and keeps your hard-earned assets exactly where they belong.