How to Protect Rental Properties From Lawsuits | LLC Strategy for Real Estate Investors

Gerard Ladalardo (00:00)
So I guess what the biggest thing is, one of the biggest misconceptions that I come across is people have an estate plan, a living trust. And I’m a big fan of those. but those protect things while you’re living and when you pass away. a lot of times I’ll I’ll have clients that have some rental properties, and whoever did the trust said, put your rental properties in the trust and they are protected. You know, just think about you got rental properties.

accidents happen, people get sued. Well, they’re not protected if they’re in a tr in a living trust, a revocable living trust. So one of the things we’ll kind of educate them on is take a look at, you know, they own multiple properties, putting them into like LLCs. So now something happens, let’s say for example, someone has their obviously their primary residence and they’ve got

Rental number one, two, and three. And a tenant falls down the stairs, maybe they get paralyzed and they sue.

Michelle Kesil (02:30)
welcome to the Real Estate Pros Podcast. I’m your host, Michelle Kesil. Today I’m joined by someone I’m looking forward to chatting with, Gerard Ladalardo of Legacy Financial LLC, supporting asset protection, income planning, and helping protect.

properties for real estate as well. So excited to have you here today, Gerard.

Gerard Ladalardo (02:54)
Thank you for having me. I’m happy to be here.

Michelle Kesil (02:55)
Perfect. So let’s dive in. So for those new to your world, can you share what your main focus is?

Gerard Ladalardo (03:02)
So my main focus is I deal with clients that are close to or in retirement, helping them, you know, take a look at their financial picture and putting a plan together so they don’t basically run out of money. And that’s kind of the high level of it, but there’s a lot of things in between. You have to take into account taxes, social security. There’s a lot of different things. And the reason I’m on this podcast today is because one of the things I also help clients with.

is asset protection and protecting some of those properties that they’ve invested in.

Michelle Kesil (03:37)
Yeah, absolutely. And where do you think most property owners miss the mark or don’t have the proper knowledge in this area?

Gerard Ladalardo (03:47)
So I guess what the biggest thing is, one of the biggest misconceptions that I come across is people have an estate plan, a living trust. And I’m a big fan of those. but those protect things while you’re living and when you pass away. a lot of times I’ll I’ll have clients that have some rental properties, and whoever did the trust said, put your rental properties in the trust and they are protected. You know, just think about you got rental properties.

accidents happen, people get sued. Well, they’re not protected if they’re in a tr in a living trust, a revocable living trust. So one of the things we’ll kind of educate them on is take a look at, you know, they own multiple properties, putting them into like LLCs. So now something happens, let’s say for example, someone has their obviously their primary residence and they’ve got

Rental number one, two, and three. And a tenant falls down the stairs, maybe they get paralyzed and they sue.

And keep in mind that there’s many different liabilities, right? We were talking about before, you know, driving, driving while tech while texting, having a teenage driver, a motorcycle RV boat, a house holiday party, any of these things, you could get sued. And if

Let’s say it just happens at one of the rental properties, an incident number three, and that property is property is properly protected into an LLC. Well, it makes it lot harder for the people to to go after everything you own. So it’s a good way of protecting, you know, your assets and your properties.

Michelle Kesil (06:14)
Yeah, absolutely. And what are the types of services that are most geared towards those in the real estate industry?

Gerard Ladalardo (06:27)
well there’s there’s a lot of different tools you can use. really kind of the main one is for like a small small portfolio, one to five rentals, like LLCs, property insurance, obviously, an umbrella policy is a good start. and larger portfolios, multiple LLCs, trust ownership of LLC interests.

Umbrella coverage, estate planning integration. So it can get kind of complicated. But as you know, you know, the longer people go and they’re building wealth and with these assets, they really do need to protect it. We do live in a litigious society. So people kind of forget, you know, they protect their, they insure their cell phone, their house, their car, but they kind of forget how or they just don’t know.

That you should be separating some of your assets, especially properties, and protecting them individually. So

Michelle Kesil (07:23)
Yeah, absolutely. What are some of the biggest benefits for investors when they do this?

Gerard Ladalardo (07:31)
Well, that’s what I just covered. So you know, as an example, if if they have three rental properties, you know, and it can be a it can be a it really depends. If if you own three condos and they’re worth eighty-five thousand dollars each, you probably could put them all in one LLC. but if you have, let’s say, three three houses and they’re worth six, seven hundred thousand each, you probably want to put them in it each in an L a separate LLC.

And that way, if something happens in one of them, they can only go after the LLC because the LLC owns that property. They can’t go after property number two, property number one, your primary residence, your brokerage account, your business, all that stuff. It makes it lot harder to go after. And then, of course, having the correct type of LLC is important. a two-person LLC is what they should have. just so you know, if

So, you know, a lot of people create LLCs and some states and courts don’t recognize a single member LLC as an actual entity. So there’s, I think when people start investing and they start buying a couple properties, they should have someone that they work with that really understands some of these caveats, especially when you’re getting into having multiple rentals and properties that you’re trying to build wealth with.

Michelle Kesil (08:54)
Yeah, thank you so much for sharing. And what do you feel have been some of the main keys that have allowed you to be able to support people and help them increase their finances?

Gerard Ladalardo (09:13)
well one of them is like you see here on my shirt says AS for advisor share. That’s my IMO. So on the insurance side, an IMO is kind of like if you’re gonna go buy a new Chevy truck, you can’t go to where they’re building it. You have to go to the dealership. So an IMO in the insurance world is kind of like the dealership. So I go to them, I have all my contracts, contracts with the carriers there, and I have a lot of support staff through there. That’s one of the

Huge benefits that you know, a lot of times there’s people a lot smarter than I am. there’s attorneys. So I have a a big support staff, especially when I’m working with clients. Cause like I know a lot about a lot of things, but I’m not an expert in certain things. I can’t I can explain tax things to clients, but I can’t give them actual tax advice. That’s where a tax advert attorney that we would work with could obviously give them that that information.

Michelle Kesil (10:46)
So what is the process when you work with a client? Is it like a one time meeting or are they working with you continuously?

Gerard Ladalardo (10:55)
It’s it’s a few meetings just to to understand their situation. And you know, sometimes there’s clients that maybe I don’t align with or whatever reason they don’t align with me. So it’s not always a perfect match. So the first meeting I always meet with clients and see if we would be a good fit. you know, and see if if what they’re looking to do, what their goals are are something I can help with. It’s you know, it’s not every time that

I can help everyone. You know, every now and then I’ll get a referral and someone’s like, yeah, I need car insurance. I’m like, I don’t I don’t do car insurance. So that first meeting is an introduction, get to know each other, see if you know we want to work together. And then if they’re interested in that and kind of understanding a little bit of their situation, I’ll gather some data. And then I’ll gather some. Once I gather that data, we have a second meeting and

Sometimes they’ll bring statement statements in of you know their their brokerage account, their 401ks, whatever it may be. If not, I’ll have them send them to me so I can take a look at because you know, 30 years ago it was not complicated. Today, when you’re looking at retirement plans, you know, you’ve got qualified accounts, non-qualified accounts, tax-free accounts, taxable accounts, and you have to know all the intricacies. There’s Social Security.

There’s Irma penalties, there’s RMDs. all these things you have to take in account. And it’s kind of like putting the pieces of a puzzle together and figuring everything out. So on that second meeting, in between there, actually, I’ll go through all these things as long as I have what I need from them. And then I’ll analyze their situation and see if there’s anywhere where we see some red flags or we can help them.

And usually I would say probably eight times out of ten when it’s someone that does own rental properties, they don’t have these things in place, like the LLCs, the asset protection. so there’s a lot of different ways we can help them. And of course, the biggest thing that we start with is whatever is their biggest concern. and then we try and tackle one thing at a time. So it could be multiple you know, meetings.

depending on and of course depending on who I have to get involved as well. So I might have to get the the attorney involved for certain things. So then I we gotta wait to meet with his schedule. And so it can get complicated.

Michelle Kesil (13:29)
Yeah, absolutely.

What are you most focused on solving or scaling to next?

Gerard Ladalardo (13:35)
that’s a great question. So I I like to work with individuals, but I also like to work with business owners. So and if you think about it, sometimes a lot of realtors, they go from, hey, I want to buy a property, maybe a second home or investment. And if they really pick it up and it’s a niche for them, maybe that’s now a business for them. So that’s something that I can help as well because there’s

There’s a lot that you can do to help people out there, but they don’t know a lot of these things.

Michelle Kesil (14:07)
Yeah, and how do you educate people so that they understand everything that they need to learn in these processes?

Gerard Ladalardo (14:17)
Yeah. So I think the biggest thing, Michelle, is kind of talk to them on their level. Like it any field you’re in, you know, you when I was in the Marine Corps, we used acronyms, right? You know, so we always use acronyms. And so in any field that you’re in, like I start talking acronyms, clients are gonna be like, What’s he talking about? They’re not gonna know. So first of all, you have to talk, I don’t wanna say down on their level, but you have to talk on a on a level that

It’s just a normal everyday level, just normal words. Don’t get into industry jargon. and you know, I’m a big fan of helping people. I’m 58 now. When I was 44, I got diagnosed with an illness by the VA and I was running a mortgage division for a bank. and was doing well. And I literally went in one day for a physical and a blood test, and I ended up going to the emergency room that night.

And I spent three years in the VA hospital in Long Beach, California. In and out, in and out, in and out for three years. Lost my job. At 47, I started over. And I have a big passion to what I went through was pretty financially, emotionally, everything devastating. And if I can help other people avoid may you know, it’s not that I made a mistake. I I just at 44, I just I was making good money, but I didn’t have

and I don’t want to blame it on someone else. It’s not someone else’s fault. But if I had the education like, hey, I should have some other things here, protection, I you know, would have fared quite a bit better. So I I’m really passionate about taking a look at people’s situation and helping them understand, you know, how we can help them, what are the red flags that we see, and how that affects them, how we can make changes.

to avoid some of those red flags and hopefully, you know, not run out of

Michelle Kesil (16:15)
Yeah, thank you for sharing. What is the biggest piece of advice you would give to someone that’s looking to start protecting their assets?

Gerard Ladalardo (16:24)
well, if you’re talking about, I mean, it and this doesn’t this goes beyond real estate. Like I said, you know, it could be anything that they own of value, you know. you could have a boat at the lake at the lakehouse and your teenage son goes cruises on the lake with friends, and the next thing you know, there’s probably beer involved, just kids being kids or just a boating accident. You know, it could be anything. And so what I would

recommend for people is to seek out someone that can help them, you know, that can take a look at their situation. I mean, it’s kind, it’s not hard to, you know, start with the basics. Like if you’re you you’ve got your primary home and you got a bunch of rentals, but you don’t have asset protection in place, you probably should. Because if you have rentals, you probably have IRAs, 401ks, a brokerage account, and all those things are

you know, susceptible to lawsuits. So I would encourage people to go seek out people that can take a look at their situation, not only for asset protection, but you know, take a look at their their financial situation. There’s a lot of times, like I said, we see we’ve spot red flags that are current in their situation or some current or some red flags that they’ll have in the future. And

you know, hopefully take an action before these things, you know, come about can can make a big difference.

Michelle Kesil (17:55)
Yeah, definitely. And are you supporting people nationwide?

Gerard Ladalardo (17:58)
Yeah, so I’m licensed in probably twenty-five different states. I don’t really work with New York. New York is just a difficult state. so for example, like if I’m looking at an income plan for a client, I’m trying to fill their income gap. So let’s say they need $100,000 a year for retirement and their pension and social security is $70,000. So their gap is $30,000, right?

Now it’s that’s not rocket science to figure out, but normally for most states, I need to create an income plan from them. And most states might have 20, 30, 50 insurance companies I can go to. New York has one. So most states I’ll work with. I’m not licensed in every state, but if I come across a client that I can help and know during the conversation that’s something we could do, I can always get licensed that state.

It usually takes a week and you just pay a fee.

Michelle Kesil (18:55)
Okay, great. Well, thank you so much for sharing all of that.

Gerard Ladalardo (18:58)
Thank you for having me.

Michelle Kesil (18:59)
course. And before we wrap up here, if someone wants to reach out, connect and learn more, where can people find you?

Gerard Ladalardo (19:05)
So they can email me, Gerard, and I don’t know why people say Gerald all the time, but it’s Gerard, G-E-R-A-R-D. So [email protected]. Or they can just go to my website and find my contact info, legacyincomeplanning.com.

Michelle Kesil (19:26)
Okay, perfect. Well appreciate your time and your story. Thank you so much for being here.

Gerard Ladalardo (19:30)
Thank you.

Michelle Kesil (19:31)
course and for the listeners tuning in, if you got value, make sure you’ve subscribed. We have more conversations with operators like Gerard who are building real businesses. And we’ll see you on the next episode.