One of my mantra’s is “going slow” when testing your niche with real estate investing. It is easy to acquire rentals, build up an inventory of wholesale , and/or rehab to retail properties. Often one doesn’t find flaws until the ball starts rolling. It can become a death sentence to your real estate business and/or investment portfolio if the flaw(s) are fatal. There are many critical components to ensuring one’s success -professional legal advice being one. Every real estate professional needs at least one professional real estate attorney to handle their title, contract, closing, eviction/foreclosure, and dispute resolution needs.
During the run up of excess in real estate, many mistakes were overlooked due to unheard of appreciation rates, overworked legal/title offices, and sloppy oversight. As a Hard (private) Money Lender, I can tell you that one of my greatest fears is a closing attorney (or title company) that performs sloppy title searches and/or loose back office checks & balances.
Let me share some real life examples. Chain of Title in recording Deed transfers (ownership change) and Deed of Trusts (mortgages/loans) is key in protecting ones’ position. I’ve found attorney’s file Deeds 3-5 days after a sale and even Deeds of Trust 3-5 days after the Deed filing. Say your buying a house today -technically you want the Deed recorded today. If some sort of judgment, suit, or insurance issue hits on the seller, your deed will become clouded. Likewise with a Deed of Trust too. Ever buy a property that is held by an estate? Imagine wrangling 5 heirs (to the estate) for closing, putting $50k into rehab, and going under contract to sell for some nice profit. You get to close and the buyers attorney says “We have a problem!” There are two heirs to the estate that did not sign over their interest to you when you bought the property. I’ve witnessed clients having to find heirs and convince them to sign over their interest. Think this cost them more money (not to mention time) then ever imagined? You bet! Ok, now some of you are saying what about Title Insurance -They’ll just solve it and pay out. Think again. Sure title insurance may settle a claim; however, it maybe 1, 2, 3 years later. What might that cost you? -And I’ve only touched on the surface of issues that we as real estate investors face.
When you call an attorney your looking for professionalism not just from that individual but the office as a whole. Does office personnel answer the phone or do you get voice mail? Can and will someone else help you? Are return calls/emails prompt? Does your attorney have the ability to discuss the pros & cons to the issue -with a solutions based goal? If they don’t know the answer and/or have the expertise in the arena you ask, rather than b.s. do you get referred to an attorney that does handle that arena?
These are the type of questions one needs to keep in mind when looking to not only build a team of attorney’s (to handle your issues) but all the professionals that will help with ones business and investment operations. Ask for referrals; however, consider whom your asking a referral from. As your operations/investments grow so will the specialties.
Professional legal advice is just one facet to success. Check out my articles: “Marketing Real Estate Investments” and “Rehabbing Real Estate Investments.”