Attorneys

Overview of Their Specializations

Attorneys are very similar to doctors - they all have a Specialty. When you are investing in Real Estate, you will want to have several different types on your team:

Estate - Anyone who has assets needs to have a revocable (read changeable) living trust created and maintained throughout their lifetime. First, it avoids the costly and time consuming process of probate, ensuring your heirs do not have to go through that. Second, it enables your assets to be easily disbursed how you see fit. And third, it protects your assets from unnecessary estate taxes.

As an investor, I will not enter into any kind of partnership with an individual who does not have a living trust. If I did, they could die and I would be left with their heirs as my new partners, possibly telling me how to run our investment. This is not a situation you want to have happen.

Many people will offer trust services, but here is a case when you get what you pay for. An ill prepared trust is a waste of your money. Pay a competent estate planning attorney to draft it and then forget about it until you need to make changes. It's that simple!

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Entity - Any time you purchase a real asset, you will have some amount of liability exposure. For instance, what if your property manager is showing the property and the prospective tenant slips and falls on the icy stairs - possible lawsuit, right?

If you take title to the property in your own name, then that person can sue you personally, and try to go after all of the assets you own - your personal home, any other rental property you may own not in a trust, businesses not in an entity, valuables, etc. It's all fair game.

By having your properties in an entity, such as an LLC, the most common way of holding title to real property, if that same person should fall and try to sue you, then they can only sue the LLC and the assets in it, not you personally and all of your assets. It limits your liability exposure.

Entities also allow you to have much better tax treatment, and also affords you an extra layer of privacy if that is important to you.

Entity structuring is quite a complex subject, and has enormous ramifications, so make sure you find an expert who has a large real estate investor client base to advise you.

If you don't have an Entity Attorney and don't know who to ask for a referral, this service may be helpful to you. Click the link below for more information:

Real Estate Law - Sooner or later you will have a conflict with someone in your real estate investment business, whether it be your realtor, a contractor, the property manager, or a tenant, and you will be far better able to handle the situation if you have a real estate attorney at your disposable than if you do not.

Make this one of the first team members you try to find. Do it before you have a conflict, not at the time one develops. Most are used to people interviewing them for their services. Most will do an initial consultation for free, and this can easily be done over the phone if you need to.

Again, I stress the importance of making sure that the attorney you hire has a substantial portion of their practice devoted to investors such as your self, otherwise they may not have the experience you need to help you when a matter arises.

Once you find one you like, pay their retainer, and then when you need them, they will be in place and you can get right to business.

You're going to need one in every state you invest in, so you'll need to become good at your interview questions. Mine reviews any documents for the state I'm investing in to make sure they hold up. It's far cheaper to have an attorney review documents then to create them from scratch. Never assume your California document will hold up in Florida.

I personally love mine - she even goes to my closings for me so I don't have to - what a time and money saver!

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Attorneys are worth every penny. Just like CPA's, I use them whenever I'm in doubt just to make sure I'm not overlooking something. You can't put a price tag on peace of mind!