Since a professional team is so important to your success as a real estate investor and, more specifically as an apartment owner, I would like to take the opportunity to discuss how to find and use these team members in a little more detail.
Just to recap, some of the essential team members that you’ll want to have in place include:
- Bird dogs
- A real estate agent or agents
- A commercial mortgage broker
- A banker (one or more)
- A title company or closing attorney
- A real estate attorney
- Private lenders
- An SEC attorney (if part of your business includes securing private funding)
- An asset protection attorney
- An accountant or CPA
- Property management companies
- Contractors
In real estate, fortunes are made every day and sometimes they are also lost. I certainly don’t wish the latter for you and there is a silver lining to be had. In almost all cases where property assets are taken away due to lawsuits, etc., the owner had little to no asset protection in place and were thus walking around with the proverbial ticking time bomb.
Asset protection is sometimes a difficult concept to get one’s fingers around. Most investors know they need it but few know exactly what they need to do. This isn’t made any easier when investors ask ten different people about their ideal asset protection strategy and get ten different answers.
Asset protection in real estate is fundamentally about two basic principles. The first is to separate assets from your personal life. This includes taking assets out of your name (as owner) and implementing one or more entities that will “own” the assets from then on. Examples of entities that can help you achieve this include trusts, LLCs, limited partnerships, and, in fewer cases, corporations.
Principle number two is to keep assets independent of each other. For example, if you owned two apartment buildings, it would generally be better to have each in its own entity, rather than both in the same one. The whole idea here is to make your assets and business as lawsuit proof as possible, since a single suit can easily wipe out assets that are left unprotected. We don’t have to be paranoid about lawsuits; proactively engaging in responsible asset protection is far better way to look at this.
Asset protection can be put in place by a number of different means. Investors can implement some strategies themselves, and this can be a good place to start. As investments grow (either in size or their number), it becomes more and more important to seek guidance from either a CPA who is familiar with asset protection techniques or an asset protection attorney, whose specialty is protecting what you own. The more you have, the more specific your efforts need to be, and it is well worth it in the long run.
Can you see how your empire can be created without you not having to be a jack of all trades? Follow with me through this series and you’ll continue to see how your own team can help you acquire the apartments you seek and help build the fortune that is out there for the taking!
