Why Asset Protection is Important for All Investors with Scott Smith
I am happy to welcome Scott Smith to the podcast today! Scott is the founder of Royal Legal Solutions, a real estate investor, and asset protection attorney in Austin, Texas. He graduated from Albany Law School and began his career in high-stakes corporate litigation. Scott has spent the past eight years of his career diving through case law, mastering tax code, and analyzing real estate investments to help investors protect their hard-earned assets.
We begin the episode with Scott sharing his career background and how he ended up in real estate. Scott is an asset protection attorney and a long-time real estate investor. He started real estate investing while in law school. After college, he worked as a litigator suing insurance companies for denying coverage until he started making enough money in real estate. Scott had no intentions of starting a firm, but he created Royal Legal Solutions after realizing that people needed help in asset protection, estate planning, and tax issues. According to him, most real estate investors have a limited knowledge of legal protection strategies.
We then talk about the kind of real estate investments Scott made to start earning more than he was making as an attorney. He shares that he invested in single-family homes. For him, focusing on real estate and legal systems for seven years now with a team of five attorneys, seven paralegals, and over 2000 clients nationwide has given him an opportunity to expand and help people. Scott says that single-family homes are a great investment avenue, especially for your first ten properties. The level of passive income they provide makes them a great place to start and then investors can branch out when they are ready.
Next, we talk about LLCs and how many times it’s the right entity to form. Scott shares that an LLC or a series of LLCs is always the right entity to form, especially during the initial stages. According to him, If you’re someone that does not have any properties yet, but you want to protect yourself personally and your clients from losses, you need an LLC to do that. Similarly, if you own one asset or real estate property, then you need an LLC so that you don’t hold assets under your name. For multiple pieces of real estate, the most efficient tool to use is a series LLC, which you can form in one state and use anywhere. This means if somebody sues you, they can’t take hold of your assets. Scott says that 95% of their clients are single-family home investors with one to seven properties, and the series LLC is by far the best vehicle of asset protection.
We then talk about ways that you can protect your real estate investments. Scott shares that the number one thing is knowing what is appropriate for you. Everybody has assets regardless of how much money they have in the bank account, their credit score, and they need to protect their access to funds. The way you protect your credit score is by establishing an LLC and operating through it for your contracts and any documentation that you’re signing. So, if a lawsuit is filed, it will sue the LLC because it’s the one that entered into an agreement and made the representation. This will give you a much cheaper downside where you can just form a new LLC versus having to defend a lawsuit that will cost you no less than $5000. According to him, LLC structures are so powerful when applied correctly.
Lastly, we talk about Scott’s company and what they offer. He shares that their approach has been to give away all the information and secrets for free. His goal is to get as many people as possible protected using the right structures. They offer an incredible amount of education for free on their website. Their giveaways include eBooks and instructional videos to get people educated to help them take action on their own or work with them. They put people who chose to work with them through an advisory process that walks them through the theories and structures that are appropriate for them. From there, they are assigned an attorney, a paralegal, and a dedicated team to help through the execution process to ensure they are doing the right things.
Make sure you don’t miss another amazing episode of the Just Start Real Estate Podcast with Scott Smith and get valuable information on asset protection strategies that you must implement today!
Notable Quotes:
“Insurance protects you from most of the risks but it doesn't cover things like misleading someone in an email or text message or a breach of contract.”
- Scott Smith
“If you own one asset in real estate then you need an LLC. You don’t hold assets in your own name.”
- Scott Smith
“You need to be thinking about ligation when you are dealing with any kind of person.”
- Scott Smith
“The series LLC is by far the best vehicle for asset protection, but if you are starting out, then an LLC is better than having nothing at all.“
- Scott Smith
“An LLC will give you a much cheaper downside if you get into a lawsuit by helping you form a new LLC versus having to defend a lawsuit.”
- Scott Smith
“LLC structures are so powerful when applied correctly.”
- Scott Smith
“We need to look at the totality of what our lives are, and our investing should match what we’re trying to accomplish with our lives.”
- Scott Smith
Links:
Level Jumping: How I Grew My Business to Over $1 Million in Profits in 12 Months
