Legal Matters & Taxes 5 Legal Real Estate Investing Tips To Know Before Buying A Property by Khaled Zaqout March 2, 2017December 23, 2021 by Khaled Zaqout March 2, 2017December 23, 2021 Knowing and following legal procedures is a mandatory step that every potential investor must go through. These legal procedures are not an obstacle. On the contrary, they are there to protect your asset and your financial well-being in case of a worst possible scenario. Before we begin discussing legal real estate investing tips, it is necessary to understand how to protect yourself legally. Hiring a lawyer to take care of all legalities is the first step before signing the purchasing contract. A lawyer understands the law and the terms of a contract and they will help you in making a decision. The lawyer will also perform a title search, which shows if there are any claims against this property. Having an attorney just serves your best interest and your efficiency in completing paperwork in time to become operational. 5 Legal Real Estate Investment Tips 1. Getting Insurance for Your Property Insurance is an important factor to be sure that whatever happens because of yourself or a tenant or a construction work, you will be reimbursed. Nothing strikes a real estate investor harder than lack of insurance. Imagine that a person has recently bought a house, renovated and rented it to some tenants for a long term period. A catastrophe occurs and the property has been robbed along with everything the new tenants own. Not having an insurance covering property damages and theft will result in the owner losing a huge sum of profit trying to replace stolen items and items stole from tenants. In simple terms, its a financial catastrophe. This is just one example. There are many other insurances that should be considered to avoid something like this happening at your investment property. Fire insurances, construction insurances, liability insurances and vacancy insurances are amongst the most important ones to consider. Getting insurance should be on the very top of real estate investing tips for all potential buyers from their lawyers. 2. Using a Company Name as Investment Owner This is a simple real estate investing tip, to avoid being personally liable for any disasters that happen. If the property was in your name and you were not able to manage or control financially whatever is happening, then you will personally be held responsible and prosecuted for each liability. However, if the property was under a limited liability name then the company would be the target leaving you with time and financial power to fix the problem. Some might argue that it is not completely legal to do this, but on the contrary you are not breaking any laws if you bend the laws to your benefit a bit. Related: Should You Form an LLC for Your Investment Property? 3. Prepare Contracts That Guard Your Investment This is one of the most important legal real estate investment tips most people ignore. Most investors think that you buy the property then rent it with a lease agreement and done. Wrong. There are so many other ways to protect yourself and your investment from a financial crisis if you pursue other legal forms. It is highly recommended to get a indemnity agreement with your tenant for example. The indemnity agreement serves two major purposes, it removes you from all liability in the event that the tenant has been harmed on your property bearing that repairs weren’t the cause of such harm. The agreement also puts full responsibility on the tenant in case of damages caused to the property. Being informed with laws and contracts is a massive step on the road of real estate success. 4. Hire a Professional Accountant What does an accountant have to do with providing legal real estate investing tips? Well, a lot. A professional accountant who is an expert in tax law in your state will provide you with ways of maximizing your profit. An accountant is able to structure your business and making deductions from your taxable income that will help you earn more. An accountant is able to help you with financial and taxation law without crossing any legal boundaries and thats why you’ll definitely need one. 5. know Short-Term Rental Legalities Short-term Airbnb rentals is considered one of the most profitable forms of property rentals at the moment. The demand for Airbnb places around the world is just growing at an unprecedented rate. If you are a real estate investor then you should definitely consider the possibility of renting your property on Airbnb to earn more money. Before you do that, it is important to check with your lawyer about licenses needed to make your real estate legal for short-term rentals. In many states in the U.S. there has been issuance of new laws that restrict anyone from becoming a short-term rental property because it conflicts with the tourism industry of hotels. Prices of such licenses to operate short-term rentals are different from one city to the other, but it is worth it in the long-term for sure. Related: Cities With the Least Airbnb Legal Issues These legal real estate investing tips are just a way for you to understand more about real estate and following them is important to protect yourself from any legal damages. Try looking up the amount of people who get fined and dragged to courts because they didn’t pay attention to legal issues or ignored them to save some money. Make your investment bulletproof by staying up to date with permitted laws and procedures. Start Your Investment Property Search! START FREE TRIAL Start Your Investment Property Search! START FREE TRIAL Airbnb RegulationsInsurance 0 FacebookTwitterGoogle +PinterestLinkedin Khaled Zaqout Khaled is an experienced content writer who enjoys writing about anything and everything real estate. Previous Post Mini Guide to Buy-and-Hold Investment Properties Next Post Everything to Know About Investment Property Exit Strategies Related Posts Airbnb Fees Investment Property Owners Should Know About Learn How to Become a Landlord to Make Money from Rental Properties How Does the Atlanta Real Estate Market Look Like for Investments at the Beginning of 2018? Tax Season 2022: Guide for Real Estate Investors Rental Property Depreciation: How It Works and Why It’s Great for Investors Professional Property Management Company: What Traits Should You Look For? Can You Refuse To Join a Homeowners Association? 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