In this day and age, people are doing a lot to invest and build their wealth. An exponential investment trend in Malaysia is real estate investments. Owning a piece of real estate property is an excellent way to build your wealth, have a passive income, and when all is said and done achieving financial freedom. Just like everything on this planet, the good comes with the bad and in this case, risks.
When it all comes down to it, asset protection is a major priority for anyone looking to invest in real estate to ensure that they do not lose their property, capital, or even personal savings for any particular reason, be it a lawsuit or other disasters.
In this article, we are focusing on how insurance, equity stripping, and anonymity are some prominent ways to protect your real estate assets.
Getting an Insurance Plan
Just like protecting your interests when getting a life or health insurance plan, an insurance plan for your property is an added protection that is the usual choice to protect your assets that works incredibly well. Being simple, easy and the fact that owners are required to have property insurance anyway, just increasing the coverage to a higher limit is a great first step!
Getting added insurance, or umbrella insurance helps to cover you on top of your primary policy and will also set your real estate investment to be ready for anything. The only problem that could be anticipated is facing a huge lawsuit that could exceed coverage and leave you liable for the difference.
With innovative Malaysia property rental platforms like SpeedHome, insurance is less of a worry as they are working with Allianz Insurance to provide protection to all properties on their platforms.
The next method sounds counterproductive however it is the least expensive of all methods, equity stripping, or equity transfer. With little to no equity, a likelihood of a potential lawsuit is decreased as there is not a lot that the lawsuit would be able to take away. In a way, debt actually provides a type of asset protection.
Some common methods of equity stripping are through spousal transfer, using one’s property as collateral, and lastly, obtaining a secure line of credit. This method does require active strategizing to maintain but in the long run, it truly helps those who do it.
Opening an Anonymous Trust
Anonymity is an incredible tool that is used worldwide as an added layer of protection. By opening an anonymous trust before creating any type of limited liability company, any paperwork that needs to be filled will be done through the limited liability company, thus removing one’s name from any records. In turn, this will make things tougher for lawyers to connect your trust to the LLC.
With the above methods, you have built multiple protective layers to shield your real estate investments and ensure a plan for you and your family. With these protective barriers set in place, protection is guaranteed!
Though you would never wish to use these methods it is better to have them and not need them than to need them and not have them! By mitigating these risks, you can save yourself a world of stress as well as guaranteeing the success of your real estate investment.
Interesting Related Article: “What is a Real Estate Investment Trust (REIT)?“