Showing posts with label Real Estate Investors. Show all posts
Showing posts with label Real Estate Investors. Show all posts

Thursday, September 3, 2020

4 Tips to Help Beginner Real Estate Investors Understand Their Business Finances

Investing in real estate can be incredibly lucrative, but it is important to realize that there are potential pitfalls around every corner. That is why new real estate investors must come up with a solid financial plan that minimizes their risks while maximizing their profits.

Set Up an LLC

Well before you invest in your first piece of property, you should set up an LLC. That type of business filing is going to limit your risks if any serious financial issues occur with your investments. 

While filing as a sole proprietorship might work as well, your personal assets could be at risk if you must file for bankruptcy or any lawsuits are directed at your company. Luckily, filing an LLC is a relatively quick process that should only take a few days to complete.

Acquire the Proper Insurance

Even though an LLC will help you protect your personal assets, you might still face some major legal or financial issues as a real estate investor. A comprehensive insurance policy is going to be your first line of defense against a wide variety of covered risks. 

That could include situations such as a tenant filing a claim against you or an individual getting injured on one of your properties.

Work With a Tax Attorney

Your taxes are quickly going to eat into your profits if you aren’t careful, and that is why many experts suggest hiring a real estate tax attorney. One of those legal professionals will be able to help you reduce your taxes so that you get to keep more of your profits. 

As your business continues to expand, they can also ensure that you don’t run into any major issues with the IRS. Hiring a tax attorney might seem like a major investment, but their help is going to be invaluable in the coming years.

Consider Working With a Property Manager

If you are only managing a few properties, then you might be able to handle all of the daily tasks and projects on your own. That being said, you might want to work with a property manager or a property management company once you have more than three or four properties to deal with. 

That type of assistance is going to be invaluable, and an experienced property manager will allow you to focus on expanding your business instead of dealing with time-consuming daily tasks.

In addition to these few tips and tricks, you must also make sure that you have a plan for pulling out of your investments if they don’t work out. An exit strategy will allow you to get back on your feet if you run into any unexpected financial or legal problems in the coming years.

Wednesday, November 27, 2019

4 Ways Real Estate Investors Can Protect Their Assets

If you have recently decided to invest in real estate, then you need to start thinking about some ways that you can protect your personal assets. Even though this type of venture can be lucrative, there are potential pitfalls around every corner, and a minor mistake could wreak havoc on your finances if you aren’t diligent.

Find the Right Insurance

Your insurance is going to be incredibly important in the coming years, and you need to make sure that you invest in the right policies. Even if you don’t plan on having any tenants on your property, you must still have a solid insurance policy. 

Without the correct insurance policy, a natural disaster or personal injury case could end up costing you huge sums of money.

Work with an Investment Group

There are quite a few reasons why many real estate entrepreneurs join larger investment groups. In addition to giving you access to more resources, an investment group could also limit your risks. Most investment groups are LLCs, and that means the individual shareholders won’t be responsible for any major issues with the properties. 

You can also find a group that has an attorney on retainer, and that legal professional is going to be invaluable if a lawsuit takes place.

Create a Land Trust

Also known as a title holding trust, a land trust is a legal entity that could protect you and your assets from a wide variety of risks. When you use a land trust to purchase a piece of property, the title of that land won’t actually be in your name. 

While you can still manage that property, other parties won’t be able to go after your personal assets if any liability issues occur. As an added bonus, land trusts can also be paired with LLCs to further protect your assets.

Limit Your Spouse’s Liability

Even if your spouse is going to help you manage the property, you should still separate your family’s assets from your business enterprise as much as possible. In most states, lenders can’t go after a spouse’s assets unless they co-signed for the credit cards or loans. 

The homestead exemption should keep your primary residence safe as well, but you might want to speak with a tax adviser about that particular exemption.

In addition to these few tips, you should also make sure that you remain patient and never overextend yourself. It might be tempting to jump at the first piece of real estate that you find, but you need to consider all of the variables before you invest any money.

Brooke Chaplan is a freelance writer and blogger. She lives and works out of her home in Los Lunas, New Mexico. She loves the outdoors and spends most of her time hiking, biking, and gardening. For more information, contact Brooke via Facebook at or Twitter @BrookeChaplan

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