Podcast Summary: BiggerPockets Real Estate Podcast

Episode Title: Do You Need an LLC for Rental Property Investing?
Host: Ashley Care (Guest Host)
Guest: Brian Bradley, Attorney and Asset Protection Expert
Date: September 1, 2025

Episode Overview

This episode tackles one of the most common questions among real estate investors: Do you need an LLC when buying rental properties? Guest host Ashley Care sits down with attorney Brian Bradley to break down the importance and limitations of LLCs, the layers of asset protection strategies (including trusts), and practical steps for both new and experienced investors. The aim is to provide clarity on legal protection, debunk common myths, and help investors make informed decisions about structuring their real estate businesses.

Key Discussion Points & Insights

1. Understanding Asset Protection (02:12)

• What is Asset Protection?

  • "Asset protection is simply placing a legal barrier between your assets and your potential creditor ... before it's needed." — Brian Bradley [02:12]
  • Think of it like putting valuables in a safe; you want assets out of your personal name so they’re not easily reached by a lawsuit.

• Common Legal Risks for Investors

  • Incidents such as accidents on property, mold issues, or failed deals can all result in lawsuits. Without protection in place at the outset, options are extremely limited if trouble arises.
  • "There's literally nothing [I can do] if you come to me after you get sued." — Brian Bradley [02:47]

2. Dispelling LLC Myths (03:24, 14:11)

• Do LLCs Make You a Target for Lawsuits?

  • Creating an LLC doesn’t create legal risk—the risk comes from the property and potential lawsuits, not the act of structuring for legal protection.
  • Legal planning before litigation is smart and fully legal: “All you’re doing is exercising your legal right to structure your wealth defensively, just like buying insurance before an accident.” — Brian Bradley [04:20]

• LLC vs. Privacy

  • Many believe a “Wyoming LLC” or other so-called ‘anonymous’ structures will make you invisible to lawsuits—this is false.
  • "Privacy does not equal protection. Privacy helps stop harassment, but it does not make you lawsuit-proof." — Brian Bradley [15:18]
  • In court, real ownership will be disclosed if needed; anonymity is a weak defense once legal proceedings begin.

• Where to Form Your LLC?

  • The best practice is to set up the LLC in the state where the property is located, because that’s where the legal risk lies.
    • “If it’s a Florida property, it would be a Florida LLC ... that’s where the damage is going to come from.” — Brian Bradley [11:53]
  • Using out-of-state entities (e.g., Wyoming LLCs owning California property) offers little extra protection and can create unwanted tax/franchise issues: “You’ve just converted your Wyoming LLC to a California LLC.” — Brian Bradley [09:47]

3. The "Layers" of Asset Protection (08:43, 13:10)

• The Three Layers:

  • Base Layer: LLC(s) in the state of the asset — basic protection, keeps property out of your personal name.
  • Middle Layer: A management company (often a Limited Partnership or “management” LLC), typically comes into play when you’ve built some portfolio size (around $500k in assets).
  • Outer Layer: Asset Protection Trust (APT), advisable for investors with around $1M+ in equity. This is the most robust layer, shielding assets from severe legal threats.

• When to Start with Asset Protection?

  • “Don’t invest in your first property unless you can afford creating an LLC… Start off smart. Don’t risk it.” — Brian Bradley [13:10]
  • If you can't afford proper structuring, wait—risking personal assets is not worth it.

4. Costs and Upkeep for an LLC (16:41)

• Typical Costs:
  • Renewal fees average around $100/year, but can be as high as $800/year per LLC in states like California.
  • Consider additional costs: bookkeeping, tax preparation, and state-specific franchise taxes.

5. Trusts & Advanced Asset Protection (20:49)

• Types of Trusts:

  • Revocable Living Trust: For estate planning, medical/financial directives, avoiding probate. Not for asset protection from lawsuits.
  • Land Trust: For privacy, but relies on connected LLC for any real protection.
  • Irrevocable Asset Protection Trust: The “teeth” of a real asset protection plan. Must be irrevocable and self-settled (you are the beneficiary).
    • "They are provisions that allow you to protect your assets from creditors… while you are living. They’re the actual teeth behind asset protection trust." — Brian Bradley [22:10]

• Domestic vs. Offshore Trusts:

  • Domestic trusts can be overridden (“pierced”) by US judges. Offshore trusts (e.g., Cook Islands) provide much stronger defense, as US courts have no jurisdiction.
  • “The downfall if it’s a purely domestic case is there’s no teeth behind that because judges can just say, do it or I’m going to hold you in civil contempt of court ... If it’s an offshore trust, it’s completely different.” — Brian Bradley [24:52]

6. Finding the Right Professionals (23:47, 27:39)

• For specialized asset protection, use a dedicated asset protection attorney, not a general estate planner.
• You’ll need a team: CPA, wealth manager, estate planner, and asset protection attorney.
  • “You really gotta start thinking about ... did the corners I cut and the team members I didn't involve ... was that a good decision? The whole reason you're creating this is for it to work under duress.” — Brian Bradley [27:39]

Notable Quotes & Memorable Moments

• "Asset protection is simply placing a legal barrier between your assets and your potential creditor... before it's needed." — Brian Bradley [02:12]
• "Don’t invest in your first property unless you can afford creating an LLC… Start off smart. Don’t risk it." — Brian Bradley [13:10]
• "Privacy does not equal protection. Privacy helps stop harassment, but it does not make you lawsuit-proof." — Brian Bradley [15:18]
• "The real gold is to actually have the asset protection; it shouldn’t matter if someone knows who you are because all of your assets are protected in this plan." — Ashley Care [16:09]
• "They are provisions that allow you to protect your assets from creditors… while you are living. They’re the actual teeth behind asset protection trust." — Brian Bradley [22:10]
• "Did the corners that I cut and the team members that I didn’t involve in this, was that a good decision? So you need to have a good CPA, you need to have a good wealth manager, you need to have an estate plan. And then if you’re owning assets, we have to protect them." — Brian Bradley [27:39]

Key Timestamps

• [02:12] – What is asset protection? Real-world examples for investors
• [03:24] – Does having an LLC make you a target? Legal myths debunked
• [08:43] – First steps for investors: how to get started with an LLC
• [09:47] – Why forming an LLC in another state can backfire
• [11:53] – Where to form an LLC if you live in one state but invest in another
• [13:10] – Should you buy your first property in your name or an LLC?
• [14:11] – The dangers of relying only on privacy or anonymity
• [16:41] – True costs of setting up and maintaining an LLC
• [20:49] – What is an asset protection trust? Trust types and their purposes
• [23:47] – Whom to consult for asset protection advice
• [24:52] – The differences between domestic and offshore trusts
• [27:39] – The importance of building the right advisory team

Final Takeaways

• Start with an LLC in the state of your property; layer up as you grow.
• Do not conflate privacy (anonymity) with actual legal protection.
• For significant wealth, advanced tools like management companies and asset protection trusts are critical.
• Consult specialized attorneys and build a professional team early – DIY and shortcuts can fail when you need protection most.
• Asset protection planning should be proactive, not reactive.

For more resources and information, Brian Bradley can be found at www.btblegal.com, and the BiggerPockets community offers further education for investors at all experience levels.