Finding the Best Real Estate Investment Location for You

Finding the Best Real Estate Investment Location for You

Every serious real estate investor is looking for the simplest way to make the greatest profit, which depends highly on finding and selecting the real estate location that is highly desirable for your target customers. This article will guide you through selection considerations, provide key information on financial calculations, and point you to resources for finding the best real estate location for you!

As in any other business, supply and demand are extremely important to a real estate investor. Smart investors focus on securing properties that are in-demand but are in low supply to the target customers. This strategy allows your price points to be high and vacancy rates or time on the market to be low, which delivers the greatest profit.

Investing in the property that is right for you will be more efficient by following these criteria.

SELECTION CONSIDERATIONS

  1. Choose your investment strategy, such as flipping single-family homes, renting multi-family real estate, or wholesaling.
  2. After determining your general market (Dallas TX Area, for example), narrow your search to the neighborhood that offers properties that match your investment strategy. If you are searching for rental properties, for example, you need to know the cash on cash return, expected income (search com), occupancy rate (check out mashvisor.com) and capitalization rate (typically referred to as “cap rate”).
  3. Consider population trends. If the population is on an upward trajectory, find out why. Contributing factors may include job growth, housing affordability amidst the growth, and personal preferences such as topography, weather, nearby shopping options, parks, and walking trails.
  4. Research tax rates, including high income taxes and high property taxes (search the local government website).
  5. Look for safe neighborhoods. You can see a visual of the safety ratings of any neighborhood at com. I also suggest you consider driving the neighborhood at different times of the day and night, checking with the local police, and speaking with residents.
  6. Get information about recorded covenants, conditions, and restrictions (CCRs) from your closing attorney or real estate agent. These rules outline what residents of the community may and may not do, such as allowing or not allowing property owners from renting their property! If the property you are considering is a part of a Home Owners Association (HOA), find out if property owners are required to pay dues and if so, how much the dues are annually.
  7. Learn about the local schools. Every family with school age children is looking for the best school possible. There are several websites that offer information under the search term “find the best school in my area.”
  8. Do residents in your target neighborhoods typically use public transportation? If so, what means are available and how accessible are they to the neighborhood?
  9. Check out local laws such as property taxes, public services (water/sewer access, police and fire station service, trash pick-up, etc.) and any regulations specifically affecting real estate investors.

After selecting your target neighborhood/s, look for the best properties that meet your criteria.

RESOURCES

Here are a few resources that have been helpful to many other investors.

  1. Check the Multiple Listing Service (MLS), which lists properties for sale by multiple real estate brokers around the US. A simple way to do this is to search com.
  2. Drive the neighborhood to find “For Sale” signs and follow up with the realtor listed or the owner if the property is For Sale By Owner (FSBO).
  3. Tell everyone you know that you are searching for a certain type of property. Clearly and concisely describe your desired property to seek referrals and leads. Write a one-liner to share with people who may be able to help you which includes the neighborhood, the price point, and the type of property you wish to purchase. Paint a picture for those who may be able to refer you to properties. “I’m looking for single-family homes that have approximately 1,500 square feet in the Fair Park section of Dallas for $120,000 or less” is one example.
  4. Use traditional and updated marketing to bring sellers to you. Checking the classified section of the newspaper is an example of traditional marketing whereas having a blog with a large following is one updated marketing strategy.
  5. To simplify the process, hire a real estate agent that works with investors. Typically this would be a realtor who has personal real estate investment experience as well as experience working with real estate investors, is happy to make multiple offers (in the same day, if needed), and is local to the geographic area you have selected. Obviously any realtor you choose to work with needs to have a great reputation with other realtors and is known to be a person of integrity.

Once you have located several prospective homes, you need to know which one to buy.

FINANCIAL CALCULATIONS

Analyze and compare your prospective investment properties to determine income potential for the different properties you located by using these calculations.

  1. Net operating income – Net operating income (NOI) is a calculation used to analyze real estate investments that generate income. Net operating incomeequals all revenue from the property minus all reasonably necessary operating expenses. NOI is a before-tax figure that excludes principal and interest payments on loans, capital expenditures, depreciation and amortization.1
  2. Cash flow – income minus expenses (as described above) including loan costs (usually a mortgage)
  3. Depreciation – income tax deduction allowing recovery of the cost of purchased property or assets used in the business
  4. Rent/Price Ratio – median price of homes in your desired neighborhood divided by the median annual rent. A lower price to rent ratio is preferred.

CONCLUSION

Business investment is about profitability. Real estate investing requires you to be extremely careful about selecting the type of investment and its location then actually finding options that meet your criteria. After running the numbers on multiple properties, you can make a good business decision as to which real estate property is worthy of your investment dollars!

Gaylene Rogers Lonergan | Board Certified Residential and Commercial Real Estate Attorney | The Lonergan Law Firm | escrow2@lonerganlaw.com | 214-503-7509

Call 214-503-7509 and ask for Moe to schedule a consultation.

Resources

1Investopedia: “Net Operating Income”, (2018, Dec. 12). Reviewed by Will Kenton.. https://www.investopedia.com/terms/n/noi.asp

Retrieved 12/26/18

© Gaylene Rogers Lonergan and Lonergan Law Firm, PLLC, 2017-18. All rights reserved. This article is provided for educational reasons exclusively and is not meant to be construed as legal advice. The Lonergan Law Firm, PLLC, will represent you only after being retained and that agreement is made in writing.

Advertisements

Understanding Owner-Financed Real Estate Transactions

Owner-financed and “seller-financed” generally mean the same thing. Owner or seller financing is a substitute for obtaining a traditional mortgage from a lender to buy a property. Instead of a bank or mortgage company financing your purchase, the seller—the person from whom you are buying the property—will act as the bank or the lender.
You will sign a legally-binding contract with the seller to make the payments on the property. The lender will record the contract with the local property recording agency, as the bank would do for a mortgage.

Why Would a Buyer Want to Finance a Purchase This Way?

The most common reason a buyer would benefit from financing a real estate purchase this way is because the buyer is not able to qualify for traditional mortgage financing. Buyers can have difficulty when:

  • Their credit score is not high enough or they can’t make a large enough down payment for a traditional lender.
  • They have had a bankruptcy or foreclosure in the past and need to wait a few years to qualify for regular financing.
  • They or their spouse are temporarily unemployed or have a pending job offer.

Also, depending upon whether the current market is a sellers’ or buyers’ market, buyers may be able to get a lower interest rate than they could with a traditional bank.

Why Would a Seller Offer to Finance Your Purchase?

Sometimes, in markets where interest rates are high, or there is too much housing inventory on the market, sellers find it difficult to sell their homes. Rather than continue to wait for markets to adjust or the perfect buyer to come along, sellers will offer to finance the sale for a certain time period. The seller benefits because:

  • The seller can get the house sold sooner
  • Sellers benefit because they collect the interest on the loan they make to the buyer
  • The seller may be able to sell at a higher price and require a higher-than-market interest rate, knowing that you can’t obtain traditional financing

What Are the Risks?

Buyers take on more risk if they buy this way, rather than use a traditional mortgage to finance the purchase:

  • If the buyer misses a payment or is late, you don’t have the same foreclosure protections that you’d have with bank mortgages.
  • The seller can immediately call the loan due for breach of contract without going through traditional foreclosure proceedings
  • Your landlord could evict you immediately
  • If you have made any improvements to the property, you could lose any money you spent to make the improvements if you violate the terms of the loan
  • In most situations, the seller can legally keep the entire amount of your down payment AND take back the house
  • If the seller is paying a mortgage on the house, fails to pay it even after you make your payment, then you could lose the house for the seller’s default
  • Title insurance will not cover every title or fraud issue
  • You will likely be paying a higher price for the house in the long-run, a higher interest rate and make large monthly payments

Get Answers From a Knowledgeable Attorney

Before getting into any kind of seller-financed or “contract for deed” buying arrangement, please consult with us. It’s extremely important to us that no one takes advantage of you. It’s best if we can review your transaction before you sign anything. Contact us online for more information.

Commercial Real Estate Mistakes To Avoid

If you’re new to the commercial real estate world or are looking at your first investment property, here are some points to consider before signing on the dotted line. 

Whose Name Goes on the Commercial Real Estate Paperwork?

In most cases, your business should purchase commercial property in the business’s name, not your own name. You’ll protect yourself from liability should there be an accident on the property or a problem with the title. It’s best to speak with an attorney who is familiar with commercial real estate matters before making a final determination on whether your name or your business’s name should appear on the purchase agreement. 

What Was the Commercial Property Used for in the Past?

It’s extremely important to know the property’s history. What may look like a hip, tiny restaurant now may have been a gas station or environmentally-regulated, hazardous waste site. Perhaps the prior sale happened decades ago before certain regulations took effect, or the property was inherited, repurposed and reopened on top of a chemical hazard before current regulations were in place. An experienced attorney can help investigate the history and the title and clear the way for sale and financing.

Commercial Zoning and Licensing

Evaluate and investigate the permissible land use for a property. If you plan to keep any structures that are present on the property, you must understand if you are legally allowed to operate your type of business on this particular property. The zoning laws governing the property determine the proper use and occupancy.

Additionally, you can’t always just move your business into an empty building on the property after the closing. You may need a new occupancy license or permit to operate. 

Commercial Loan Applications and Underwriting

Even before you start your search, explore lending options with several lenders. It’s important to understand what your lender will require before applying for a loan to purchase your property. You should also know what amount you’ll qualify for, if the lender will restrict the kind or location of the property you buy, or impose other restrictions on the loan qualification process. 

You should also understand your short- and long-term expectations for a property. Create a budget and plan for your move up to a year ahead of time. Investigate your up-front and closing costs, monthly expenses, mortgage expenses and what you need to generate in income each month to cover these expenses. 

Location, Location, Location

This is the cardinal rule in any real estate purchase. Choosing the wrong location can spell disaster for your business if there is no traffic or for resale in the future. Your broker can help you analyze the factors that are important to your business to see if a specific property makes financial sense for you. Don’t buy on emotion. You should also consider the intangibles like: 

  • Employee security and commuting distances
  • Traffic patterns and neighborhood demographics
  • Will customers come if they perceive that the neighborhood is not safe

Rely on Attorneys With Commercial Real Estate Experience

The most important thing you can do throughout the purchase process is to perform your due diligence on the entire transaction. Your broker or agent is knowledgeable, but not objective and independent from the sale or purchase. 

Work with an attorney with a history of commercial real estate experience for dedicated help. If you’re in Texas, we welcome you to reach out to us. Contact us as soon as possible to review your property’s details, title and history. 

Planning for a Home Inspection in Texas

You have cleaned outside and inside to make your house attractive to buyers. You even may have  gotten rid of a few things. But don’t forget to prepare for the home inspection.

Whether a buyer is planning to live in the house or rent it, he or she will need to be assured of which systems work and which don’t. If the buyer isn’t happy with the outcome of the home inspection, they may cancel the contract or ask to renegotiate the price, as the home inspection is a contingency in most contracts.

One of the first actions to be taken once a contract to sell the property is signed is that the seller must provide a Seller’s Disclosure of the property condition in writing to the purchaser.

“Seller disclosures in Texas are governed by Texas Property Code Section §5.008. That statute provides: ‘A seller of residential real property comprising not more than one dwelling unit located in this state shall give to the purchaser of the property a written notice’ of material defects in the property. The statute asks sellers to use the disclosure form developed by the Texas Real Estate Commission (TREC), which is a state agency charged with generally overseeing the real estate market.

“This form must be delivered to the buyer ‘on or before the effective date’ of the property purchase contract. In other words, you cannot have the buyer sign the purchase contract and become bound by it, and then a week later, hand the buyer a disclosure form saying that the electricity in the house does not work.” 1

Failure by the seller to accurately disclose known property defects can result in serious legal issues for the seller. A seller can be sued for misrepresentation, fraud, and even violation of the Texas Deceptive Trade Practices Act for intentional concealment of known property defects that go undisclosed.

I have consulted with numerous homeowners over the past several years who were sold properties, sometimes by investors, only to discover that serious property defects were covered up cosmetically and not disclosed. Such actions by sellers have often resulted in extended litigation, costing both sides a great deal of money.

The inspector’s job then is to report all deficiencies and/or safety violations according to code, so everything will be inspected, not just the items identified in the Seller’s Disclosure of property condition.

You may expect that the foundation, shingles, gutters, toilets, plumbing and electrical will be checked. But don’t forget that the not-so-obvious will be reported, such as cracks, water stains, broken windows, and improper venting.

To be competitive, you’ll want to prepare for the home inspection by following these guidelines.

  1. Sometimes inspectors are early, so be prepared . . . you probably don’t want to see someone poking around outside your bathroom window while you are brushing your teeth.
  2. You know to clean the house; however, to make it easy for the inspector, you may want to go the extra mile, such as cleaning or changing filters, replacing batteries in smoke detectors if needed, replacing torn screens, and trimming trees near the roof.
  3. Even if you have moved prior to selling the home, the utilities must remain connected so the dishwasher, furnace, stove, furnace, A/C and receptacles can be checked.
  4. Ensure all pilot lights are lit.
  5. Make access easy to the A/C, furnace, water heater, garage, basement and attic. This includes removing brush, snow, trash cans, and the like. Provide the garage remote/key as well as keys to any additional buildings. Electrical boxes and sprinkler systems must be available for inspection. Unlock gates.
  6. If you have replaced the roof, furnace, A/C or other item, fixed a leaky faucet, or have proof of an insurance claim, give the inspector the documentation.
  7. You and your pets should leave the house for at least three hours.

If there are any items that do not pass inspection, you must decide whether to make the repairs and not take a chance on losing a prospective buyer or try to negotiate with a buyer. For example, you may agree to fix some items or reduce the price of the home to the degree necessary for the repairs to be made.

Being prepared for the home inspection is an important step in the sales process and will give you an advantage in a competitive housing market!

BACK TO HOMEPAGE

CALL US AT 214-503-7509. ASK FOR MOE TO SCHEDULE A CONSULTATION

1Farkas, Brian. “Selling a Texas Home: What Are My Disclosure Obligations?” https://www.nolo.com/legal-encyclopedia/selling-texas-home-disclosure-obligations.html

References

Farkas, Brian. “Selling a Texas Home: What Are My Disclosure Obligations?” https://www.nolo.com/legal-encyclopedia/selling-texas-home-disclosure-obligations.html

Gordon, Lisa (2017, March 14). “Selling Your House? Better Prepare for the Home Inspection”. https://www.realtor.com/advice/sell/prepare-home-inspection/

Weintraub, Elizabeth (2018, August 24). “How to Get Ready for a Home Inspection”. https://www.thebalance.com/get-ready-for-a-home-inspection-1798690

Zillow’s Home Sellers Guide. “How to Prepare for a Home Inspection”. https://www.nolo.com/legal-encycopedia/selling-texas-home-disclosure-obligations.html

© Gaylene Rogers Lonergan and Lonergan Law Firm, PLLC, 2018. All rights reserved. This article is provided for educational reasons exclusively and is not meant to be construed as legal advice. The Lonergan Law Firm, PLLC, will represent you only after being retained and that agreement is made in writing.

Gaylene Rogers Lonergan | Board Certified Residential and Commercial Real Estate Attorney | The Lonergan Law Firm | escrow2@lonerganlaw.com | 214-503-7509

BACK TO HOMEPAGE

CALL US AT 214-503-7509. ASK FOR MOE TO SCHEDULE A CONSULTATION

 

3 Reasons to Use a Real Estate Attorney When Buying a Home

Buying a home is one of the biggest, most important purchases you’ll make during your lifetime. You’re investing a lot of money while committing to making monthly payments for up to 30 years. 

Before you sign on the dotted line, protect yourself. Make sure to involve one of our experienced real estate attorneys right from the start. 

3 Reasons to Hire an Attorney at the Outset of the Home Buying Journey

You’ll want to enjoy your home for many years to come without worrying about hidden legal and title problems that the seller should have disclosed. Here are three reasons to have a lawyer involved in a real estate transaction from the beginning: 

1. To Avoid Title Issues

Title issues come up in many contexts, including zoning and estate matters. However, some of the most common problems arise when:  

  • A creditor filed a lien on the home against a seller, preventing the seller from selling the home
  • The seller is divorced but the former spouse’s name is still on the deed
  • Children inherit a property but not all of them agree to sell it, an attorney can help negotiate the purchase with the remaining siblings who inherited a share of the property. 

2. To Protect You When Buying a Foreclosed Property 

Buying a foreclosed property is attractive because there are many bargains to be found. Yet, the process is complex. Novice buyers can be on the hook for hidden fees and costs on a disaster of a property that is sold “as-is.” 

If you’ve never purchased a foreclosed property before, you’ll definitely want to involve a lawyer as soon as possible. A lawyer can explain the risks and benefits and protect your interests at the same time. The upside is that you can find a suitable, well-priced property after doing your due diligence and having a lawyer represent you. 

3. To Prevent Problems Before and After Closing

Even after a smooth closing, problems can come up. Real estate agents alone can’t always predict legal problems and aren’t trained to spot them. Most agents just want to get the deal done and closed on schedule. 

But what if you later discover a non-conforming addition, hazardous waste or your pre-closing inspection reveals a serious problem like radon or a serious rodent or snake infestation? Some agents will convince clients to allow sellers to “fix” a problem after the sale closes or adjust the price. 

We can be involved in your purchase from beginning to end. If you involve us early, you could save yourself a lot of time, aggravation and money later. 

A Lawyer Can Help Your Transaction Go More Smoothly

We are a trusted, full-service Dallas real estate law firm and have helped people buy and sell real estate for decades. Please email or call us at 214-760-6768 to learn about how we can help make your home purchase and closing go smoothly. 

BACK TO HOMEPAGE

CALL US AT 214-503-7509. ASK FOR MOE TO SCHEDULE A CONSULTATION

From Contract to Closing

You’ve found the house of your dreams and you can hardly wait for moving day! If you are a Real Estate Investor, the property is your next deal and you are looking forward to rehabbing and renting or selling. Either way, your excitement level is high and you’re ready to get started.

There are important steps to take before settling into the sofa in this new home and each one is very important and can have financial consequences.

  1. Negotiate the contract with the seller. If your transaction involves a realtor, he or she will supply the contract and handle the negotiation. If you are buying a property directly from the owner, we suggest you involve a Real Estate Attorney to assist you with the negotiations.
  2. Apply for funding. Immediately after the contract is negotiated, the buyer needs to make application at a reputable lender. Buyers will need to provide all necessary information to the lender such as income, assets, debts and credit history. In tight markets where houses are hard to find, it may be necessary to become approved for a loan before looking for a house so you can make an offer on the same day you find the one you want. The realtor will need to stay in constant contact with the lender regarding buyer’s application.
  3. Fully evaluate the property. The contract has a provision for “termination options”. The buyer pays a negotiated amount for the number of days necessary to complete their due diligence. A complete inspection of the property, including a termite inspection, should be ordered and paid for by the buyer from an inspector deemed to be an expert. After reviewing the inspection report, the buyer(s) has a right to request that the seller(s) address all concerns they may have about the property, which may result in a renegotiation, or even a termination, of the contract.
  4. Get the property appraised. The lender will require a property appraisal to make sure that its value is equal to or greater than the requested loan amount. The appraiser’s evaluation must prove that the property is worth at least as much as the buyer agreed to pay.
  5. Wait on loan approval! When the lender has completed the due diligence and made a decision on the loan, the buyer will be notified. The buyer’s agent as well as the seller’s agent should work to ensure that the lender has all the documents necessary and that all steps are taken in the loan approval process in order to avoid a delay in the closing.
  6. Select a title company, preferably one with a Board Certified Residential Real Estate Attorney, who will close the title or supervise the closing and has years of operational experience.
  • The title company does a title search and determines that the real estate title is legitimate and whom the title is vested in, so the buyer can be confident that he or she is the legal owner of the real estate.
  • This process includes searching for outstanding mortgages, judgments, liens, restrictions, leases, easements, unpaid taxes, or other encumbrances against the property that may affect ownership.
  • The title company will strongly recommend to the buyer to purchase title insurance in case the title examiner or other party had made a mistake in the title search or in case there is some unknown issue back in the chain of title, such as a forgery, for example. This insurance is another level of protection. If the buyer chooses (or if the seller is contractually obligated) to purchase the title insurance for the property, the title company then issues a title insurance policy. This insurance protects the owner and/or lender from potential claims or lawsuits that may result over ownership disputes.
  • Bring the following to the closing – valid photo id (driver’s license or passport), cashier’s check or certified check for the down payment and closing costs (never bring cash), proof of insurance, and the final purchase and sales contract. In case there is a small fee that was unanticipated, it is always a good idea to bring a blank personal check.
  • Expect to sign these and other documents at the title closing. (a) Closing Disclosure or HUD-1 Settlement Statement (multiple pages), (b) Warranty Deed, and (c) title company requested documents.
  1. Purchase homeowners’ insurance. If you are the intended homeowner, expect the lender to have pre-determined requirements. The seller’s agent should help the buyer ensure that proper coverage is purchased. If you are purchasing for cash or if you are a real estate investor, depending on the transaction, either you will purchase it or an end-buyer will acquire the insurance with you as an additional insured.
  2. Transfer utilities. It is prudent for the buyer and seller to make arrangements for the utilities to be transferred to the buyer if necessary, usually upon the closing date. Buyers may need to make application to the various utility companies.

CONCLUSION

Purchasing a house for yourself or as an investor is much more than one big step! It is a series of important actions that must be completed in order to ensure that you will be the lawful owner of the property, take only a suitable financial risk in securing funding, and that the property is in good shape to mitigate big surprises after you take possession.

BACK TO HOMEPAGE

CALL US AT 214-503-7509. ASK FOR MOE TO SCHEDULE A CONSULTATION

© Gaylene Rogers Lonergan and Lonergan Law Firm, PLLC, 2017. All rights reserved. This article is provided for educational reasons exclusively and is not meant to be construed as legal advice. The Lonergan Law Firm, PLLC, will represent you only after being retained and that agreement is made in writing.

Gaylene Rogers Lonergan | The Lonergan Law Firm, PLLC                                escrow2@lonerganlaw.com | 214-503-7509

 

Incorporate as an LLC to Protect Your Personal Assets and Reduce Your Risks

If a lawsuit were filed against your real estate business, are you sure your personal assets would be protected?

      

“Consider the situation in which the owner of an investment property leases it to a tenant who decides to throw a big party, during which one of the tenant’s guests falls over a balcony. In today’s legal climate, it is quite possible that the injured guest would pursue a claim based on the ‘unsafe condition’ of the rental dwelling. More often than not, the owner would be named in any lawsuit resulting from the incident.

“If that rental property were owned by a real estate investor individually, he or she would be named in the lawsuit and would have to defend his or her personal assets from the plaintiff’s claims. In contrast, if that property were owned by an LLC, the owner’s risk exposure would be insulated by the protection of the company, leaving only the assets owned by the LLC (as opposed to all of the owner’s personal assets) exposed to potential lawsuits.”1

As a real estate investor, you know you have a lot at stake. Incorporating as an LLC can provide numerous protections to help you preserve your personal assets and reduce other key risks that could cripple or devastate your business.

Here are six of the most significant benefits of incorporating as an LLC.

  1. Reduce Risk of Personal Exposure

If your business is incorporated as an LLC, your personal finances have a veil of protection against lawsuits and creditors. As in the illustration above, if you were to be sued in relation to a property you own, being incorporated as an LLC limits your personal liability. So rather than the lawsuit being aimed at you personally, it will be aimed at the corporation and only the corporation’s assets are exposed. And there is no shortage of potential lawsuits. If a fire were to erupt on one of your properties and spread other places, the corporate veil of the LLC would protect your personal assets from paying for the damages. A testy tenant could cost you untold amounts personally unless the LLC is in place, the title is held by the LLC, and the lease is with the LLC. If a tenant’s guest is harmed, a lawsuit could be pursued. There are many other examples but the point is clear!

  1. Protect Other Investments

If each of your properties is held in a separate LLC and a tenant sues the LLC, all your other properties are protected. In Texas, a Series LLC can also provide that protection without the necessity of separate LLCs being incorporated.

  1. Receive Tax Benefits

Perhaps the most significant tax benefit afforded to owners of LLCs is avoiding double taxation. “Since there is no separate LLC tax, the owner can avoid double taxation on both the rental income generated by the property and the appreciation in value of the property upon disposition. Moreover, the owner of a single-member LLC can deduct mortgage interest similar to a sole proprietor based on current IRS rules.”2

  1. Protect Against Co-Investors

If your real estate partner should die, become incapacitated, or oppose you professionally, your business risk would increase dramatically unless you have an LLC operating agreement in place. This document allows partners to determine the protocols for disputes or if one owner decides to leave the corporation.

  1. Improve Credibility

Having initials after your name that indicate an education level or certification carries a lot of weight! For the same reason, the term “LLC“ being a part of your company name demonstrates that you take your business seriously.

  1. Peace of Mind

Knowing that you have taken such a significant precaution to protect your personal assets by incorporating can allow you to relax a little better when your head hits the pillow!

Your personal assets need to be separate from your business assets in order to protect you and your family from any of the mishaps that can happen in business. Incorporating your real estate business as an LLC provides the necessary corporate veil to do just that. When each of your properties is incorporated separately, you have additional protection that may save your business should you be sued.

There is one warning, however. You must operate the LLC as a standalone entity with its own identity, i.e., separate bank account, separate books, and accurate paperwork. Otherwise you could lose the “corporate veil” and others could reach your personal assets. A lawyer can help you with advice on how to ensure you are protected.

Next Step

The Lonergan Law Firm, PLLC, can help you protect your real estate business by setting up your LLC. Contact us by emailing Escrow2@LonerganLaw.com or by calling us at 214-503-7509 and asking for Gaylene’s personal assistant, Moe.

BACK TO HOMEPAGE

CALL US AT 214-503-7509. ASK FOR MOE TO SCHEDULE A CONSULTATION

Footnotes:

1 Weaver, Jeff, Esq. LegalZoom.com. “Forming an LLC for Real Estate Investments: Pros and Cons”. https://www.legalzoom.com/articles/forming-an-llc-for-real-estate-investments-pros-cons. Retrieved 9/29/17.

2Weaver, Jeff, Esq., “Forming an LLC for Real Estate Investments: Pros and Cons”. https://www.legalzoom.com/articles/forming-an-llc-for-real-estate-investments-pros-cons, LegalZoom.com, January 2014. Retrieved 9/29/17.

RESOURCES

Esajian, J.D., “Five Mistakes to Avoid when Forming an LLC”,   https://www.fortunebuilders.com/forming-a-real-estate-llc/, Fortune Builders. Retrieved 9/29/17.

Incorporate.com., “Incorporate a Real Estate Company or Form an LLC”.   https://www.incorporate.com/real_estate.html, The Company Corporation. Retrieved 9/29/17.

Law Inc., “Why LLCs are Crucial for Real Estate Investing.” https://www.lawinc.com/llcs-crucial-real-estate-investors/, LawInc.com, July 26, 2017.  Retrieved 9/29/17.

Merrill, Than, “A Beginners Guide to Starting LLCs for Real Estate: Part 1.” https://www.fortunebuilders.com/beginners-guide-starting-an-llc-part-1/, Fortune Builders. Retrieved 9/29/17.

Weaver, Jeff, Esq., “Forming an LLC for Real Estate Investments: Pros and Cons”.   https://www.legalzoom.com/articles/forming-an-llc-for-real-estate-investments-pros-cons, LegalZoom.com, January 2014. Retrieved 9/29/17.

© Gaylene Rogers Lonergan and Lonergan Law Firm, PLLC, 2017-2018. All rights reserved. This article is provided for educational reasons exclusively and is not meant to be construed as legal advice. The Lonergan Law Firm, PLLC, will represent you only after being retained and that agreement is made in writing.

Gaylene Rogers Lonergan | The Lonergan Law Firm | Escrow2@lonerganlaw.com |

214-503-7509