June 2015

Should You Get an LLC For Your Real Estate Business?

Perhaps the most common question I receive from BiggerPockets members is, “Should I set up an LLC for my real estate business?

It’s a good question because I’m sure you’ve heard the horror stories of landlords getting sued by tenants and losing everything. You didn’t spend years learning about real estate, growing your portfolio, and figuring out how to be an effective landlord only to lose it all to some deadbeat looking to game the legal system.

However, LLCs are also highly misunderstood in the real estate space because they are just so darn complicated. What works for one person may not work for you, and what works for you might not work for me. While I could give you the simple answer of “talk to an attorney,” I want to dive a little deeper.

Of course, I am neither an attorney nor a CPA, so please take what I’m saying as my own personal opinion and get a qualified person to help you out with these legal discussions.

What is an LLC?

First, let’s talk about what an LLC is and what it isn’t. An LLC is NOT a get-out-of-jail-free card. You can be sued with an LLC, and you can lose everything. An LLC is not designed to prevent you from ever being sued. An LLC is designed to help you manage and contain the fallout from that lawsuit.

(click to continue reading on BiggerPockets)

Want to Make $1,000 or More Per Hour?

(I originally wrote this article a few weeks back for entrepreneur.com, and the awesome editors there allowed me to republish it there. To see the original post, click here.)

How would you like to make $1,000 per hour?

No, you don’t need to go to law school or become a doctor. In fact, you can start making $1,000 an hour or more right now.

This is not an article about some new multilevel marketing company or passive income stream. You can achieve these results in your current business, knowing what you already know.

And best of all — you can make this money consistently.

Related: The 80/20 Rule of Time Management: Stop Wasting Your Time

I recently listened to 80/20 Sales and Marketing by Perry Marshall on Audible. Like these booksI mentioned a few weeks ago, 80/20 Sales and Marketing is changing how I think about business. (Whether you are in sales and marketing or not, pick up a copy of this book today. Trust me.)

In the book, Marshall explains how in a typical day, a person does numerous tasks that are worth just a few dollars per hour, and a few small tasks that are worth much more.

How Much is an Hour Worth?

(click to continue reading on BiggerPockets)

How to Find the Right Rental Lease for Your Landlording Business

In the late 1920s, President Coolidge invited some friends to dine with him at the White House.

Not wanting to make fools of themselves and unsure of the proper etiquette for dining in such a setting, the friends decided to simply copy exactly what the President did at the table. The meal was served and the President took a bite, as did his friends. The President then took a drink, as did his friends. Then, the President poured some milk into a saucer, followed by some sugar. The friends did likewise with their own saucer. Then the President picked up the saucer, leaned over, and placed it on the floor… for the cat. (Source: The Speaker’s Quote Book)

As the President’s friends in the above story illustrate, sometimes imitation can be helpful in an unknown setting, but oftentimes it can make the imitator look like a fool! This is the case when a person simply copies another lease they picked up to use for their investments. Perhaps you’ll be fine, but should the case arise where you need to use the lease for a big legal situation, the wrong lease could also cost you a lot of money.

Related: 5 Legitimate Reasons to Allow a Tenant to Break Their Lease

Why the RIGHT Lease Matters

A common mistake made by many new landlords is to go online and simply Google “Free Rental Lease” and see what comes up. Typically, they’ll print off whatever pops up and try to use it for their rental.

The problem with this, of course, should be obvious: you have no idea if that lease you found is legal and valid. A lease drawn up by a lawyer in one state might be totally different than a lease drawn up in another. Every state, and even many cities, have specific laws that govern what is and is not legal in a rental agreement. Plus, the laws change all the time, so a lease that worked last year might not work this year.

Sure, if you never have a problem with your tenant, that lease you found on Google might be fine, but we don’t use lease agreements to prepare for the good times, we use lease agreements to prepare for the bad!

What happens when you try to evict your tenant and you realize the lease has a provision that is not allowed in your state that delays or messes up the eviction process? What if your tenant tries to sue you because something in that lease was not legal in your state or city? These are real possibilities if you are using a boilerplate lease.

So where should you look for a good, legal rental lease agreement? Here are a few places…

How to Find a Lease Agreement

The following are 3 places you can find a lease agreement.

(Click to read on BiggerPockets…)

Contractors are difficult to deal with.

It’s just the nature of the beast.

But if you are a landlord, or any kind of real estate investor, dealing with those in the construction trade is part of daily life. This is especially true for landlords, like myself, who choose to invest in fixer-upper rentals to gain that extra equity push. (See How to Make $100,000 Per Year with Fixer-Upper Rental Properties for more info on this “BRRRR” strategy.)

But how do you start?  How do you know they aren’t ripping you off? How to do you decrease the stress and make the process streamlined?

The truth is, there is no perfect system. But hopefully these eight tips can help.

RelatedThe Ultimate Guide to Finding an Incredible Contractor

8 Tips for Managing Contractors and Handymen

1. When to Use Bids vs. Hourly Pay

Larger jobs tend to work better by “bid” where smaller jobs tend to work better by “hourly” pay, but there is no hard and fast rule for either. Some contractors prefer one method over another, but it’s usually negotiable.

(Click to read on BiggerPockets…)