KEEP IT ONCE YOU MAKE IT: Asset Protection and Risk Management Strategies for Real Estate Investors Presented by: Jason S. Buckingham Attorney at Law Law Offices of Jason S. Buckingham, Inc. www.jsb-law.com IMPORTANT NOTICE: This information is provided for general educational purposes only. It is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice about your situation. Whether you are new to real estate, or a seasoned pro, it will help you greatly to view your investment activities as business ventures. ● ● ● Due Diligence = Key Treat your deals and holdings as separate “businesses” Don’t be afraid to delegate - this is a team effort FIRST RULE: BUY SMART Beyond the cash flow and upside potential: INSURE. Do you always buy: Extended Coverage Title Insurance? Flood Insurance? “Landlord Insurance” coverage for lost rent? Extended Liability coverage? DUE DILIGENCE: KNOWING WHAT’S WHAT ● ● ● ● ● ● ● Preliminary Reports / Title documents / CC&Rs Zoning / Use maps Flood zone & Seismic zone maps Fire hazard areas Property Condition Report & inspections Environmental / Hazardous Materials info (Phase I & II reports) Local school, crime statistics (example: sex offender list) “You don’t know anything until you know everything.” STRENGTH THROUGH DIVISION ● ● ● “Special Purpose Entity” LLCs, LPs, corporations General rule: each property gets its own entity Lawsuit protection Bankruptcy protection ● Fractional ownership: a small piece of a big property WHO’S ON YOUR TEAM? With all the complex tax and legal rules that apply to businesses, it is imperative that you have an extensive network of experts available for the issues you will face sooner or later. Also, it doesn’t hurt to have mentors who can help you get to the next level, no matter where you are in your investment experience. ● ● CPAs: Income tax, capital gains tax, estate tax, 1031 exchanges Attorneys: General advice, entity formation, document review, title and escrow, employer issues, estate and business succession planning, litigation, etc. Insurance: Title, hazard, liability, E&O, life, health, etc. Other investors: Ideas, deals, mentoring, capital, joint ventures / TICs ● ●