This video is part of our series focused on the every day real estate investor. Every day real estate investors are folks who normally have careers, full time jobs and on the side, want to start investing in real estate. They might purchase properties to flip or hold and rent to tenants.
Often these investors have a lot of questions about how to best protect themselves from liability. Insurance is one piece of that puzzle, but often people don't know what kind, or how much insurance to buy to best protect themselves.
In this video, we discuss insurance for real estate investors with Jen Gregorski of Farmers' Insurance. Jen is an award-winning agent with an office in Dresher, PA. She has over 20 years of experience in the insurance industry and protecting property owners.
For more information from Jen, visit www.jengregorski.com
Over the next few weeks, we're going to answer some common questions asked by everyday real estate investors. In this first video, we address the #1 question we get, "Should I set up an LLC for my real estate properties?" Watch below for our answer!
The biggest question that we get from people thinking about or have already invested in real estate is, should I put my properties into an LLC or some kind of other business entity?
The answer to that is really, it depends. It depends a lot on how you finance the property. So number one, think about, have you used mortgages in your personal name to buy these properties? Number two, have you used commercial financing to buy the properties? You're going to want to get an opinion of somebody like an attorney or banker to see if, in fact, based on your financing, if you can move the properties into some type of business entity or not.
Next, you really want to think about what's your long-term plan with these properties. Are you going to be holding them, are you flipping them? What is the real nature of the risk? It's very important to look at each one on an individual basis and really figure out, "God forbid, if something terrible happened, how much exposure do I really face?" Because the exposure between buying and holding a property for a short period of time and flipping it versus holding for the long-term and stocking that property with tenants, that's a very different type of risk.
So the best thing is to get a professional opinion as to whether you can put them in an LLC, and then, how to overall structure your portfolio of holdings. Do you need multiple LLCs? Will just one suffice?
Stay tuned for some additional helpful videos for real estate investors on our channel.
You can always set up a time to talk with our office about how we can help structure your real estate properties.
Are you investing in property and not sure how to protect yourself? Should you open an LLC? What kind of insurance do you need? Are you going to manage the property yourself? What happens if a tenant wants to sue you?
There are a lot of websites and programs out there for property investors that just contain BAD information. Not having the right protections in place can cost you a lot of money and put your assets at risk.
A few years ago, we had a best selling book on Amazon.com that laid out our three part protection system for investors. We've now made that system available as a short, free report. Grab a copy of the report here.
Are you contemplating a business partnership?
Are you preoccupied with the equity split?
How much money is each partner putting in?
Who will work in the business, and how often?
What happens if you're 50/50 partners and you can't agree?
Can your partner legally drain the business bank account without your consent?
What happens if someone wants to leave the business?
Would you let your partner leave and start a competing business?
How will you know what's actually going on in the business?
Can you really trust your business partner?
Much like good fences make good neighbors, good documents make good partnerships.
Grab our FREE Partnership Blueprint to find out how to avoid a nightmarish business partnership.
Good documents make great business partnerships! So often new business owners develop a great idea with a business partner and in the excitement of getting the business of the ground, they don't put into place the basic documents needed to govern a successful partnership. Here are three ways to ensure your business partnership is on the right track:
1) You have an honest discussion about expectations. Too often, partnerships fall apart because one partner has vastly different ideas and expectations about how much each partner should be working, when vacations are allowed, what hours each should be working, etc. When one partner views the other as not pulling their weight, resentment builds and the relationship goes downhill.
2) Talk about things no one wants to consider. What if a partner died, became disabled or even got divorced? Those are all difficult topics to talk about, but they have a huge impact on a business partner. You need to have written instructions in place in case any of these things happen, or your business will be left in limbo, potentially fighting it out with your business parter's family.
3) How will you decide how much the business is worth? If anyone wants to leave the business as a point in time, you need to have a formula to calculate what that person will be paid when they leave. This means you need to have a method in place BEFORE there's an issue.
These are a few basic ways to make sure a partnership stays friendly. The best practice is to get a proper Operating Agreement or Shareholder Agreement and a Buy Sell Agreement in place. We'd be happy to help on a flat fee basis, contact our office today.
Hiring and managing staff is one of the biggest struggles of a growing business. Even if you've hired what look like the "right" people on paper, once they're in the door and comfortable, if you're not training and monitoring in the right way, it won't take long for you to lose control.
Here are three ways to take back control from unruly staff:
1) develop an employee handbook: as soon as you have five employees, it's time to have written policies and procedures. A handbook is the place to outline your needs and expectations. Setting clear expectation is the first step to happy employees. If you send mixed messages at the leader, set clarity with written policies.
2) have formal, regular reviews. Many times we help employers who have half a dozen employees and they are never reviewing anyone's performance. For those that are holding review, the record keeping is usually very sloppy. Empower your employees to have input in their reviews and set goals. Make sure goals are followed up on at subsequent reviews. It becomes difficult to fire employees who have no history of unflattering reviews or no documentation in their employment file of problems.
3) nip problems in the bud. If your employees are constantly late, on their personal phones all the time, and not being as productive as you'd like, you need to tell them ASAP. Don't wait until a review or a "better time." There isn't a better time, and looking the other way from bad behavior only serves to reinforce it.
If you're struggling to control your staff, sometimes you're the problem, not them. If you don't have clear documents, clear policies and regular reviews in place, it's time to get everything buttoned up and establish some real HR procedures. If you need help getting your employment ducks in a row, reach out to our office for a flat fee employment package.
Have you thought about expanding your business but want to rip your hair out?
After all, doesn't expansion mean finding investors and giving away equity?
Doesn't it mean hiring a ton of additional staff and dealing with more staff drama?
Doesn't it also mean taking on more overhead with additional leases and overhead?
You might be thinking about business expansion ALL WRONG.
What if there was a way to expand your business by:
letting someone else open new locations;
letting someone else hire more staff and deal with the drama;
retaining all of your equity;
maintaining your good brand name and standards;
and collecting fees to grow your empire.
There is a way, and on this free training, you'll discover the method to expanding your business without having to give up equity, hire more staff or deal with more drama.
Register for this free training today!
It is common knowledge that you should consult with a business lawyer when setting up your business and in the beginning the occasional simple consult is enough to manage your legal needs. As your business grows though you will most likely find yourself in the position to need legal expertise more frequently. Having a General Counsel on hand can be extremely valuable to your business and it is a good idea to set up this relationship sooner rather than later.
Sarah E. Holmes is a Philadelphia business attorney and strategist that helps start ups and established businesses looking to expand, protect their assets and increase their profits in an approachable, down-to-earth way. When you're looking for a business lawyer near you, we offer several convenient locations.