Frequent fluctuations in the real estate market make it difficult to forecast when the market will favor buyers or sellers, but many economists foresee the real estate market remaining a Seller’s market. According to Svenja Gudell, the Chief Economist at Zillow, inventory of homes for sale will remain low well into 2018 as sale prices continue to rise.
Low inventory, along with an increase in prices and demand, will cost you more as an investor if you do not act fast and are more aggressive during the procurement process. There are still deals out there, particularly properties that are up for sale by owners undergoing a divorce or individuals who inherited their property through probate.
As a real estate investor, set yourself up to succeed by implementing the following three steps in your acquisition efforts (if you haven’t done so already):
1. Add a Real Estate Attorney to Your Team
While there is an “I” in the term “investors,” it doesn’t mean investors should take on the entire investment process alone. It’s possible for investors to locate, procure, and manage rental properties on their own; however, more often than not, the various contracts involved during the process may pose risks investors are unaware of or pose potential problems which are difficult to resolve alone during the process without legal counsel.
To make the investment process as smooth as possible, investors should consider including an experienced real estate attorney to their team for the following reasons:
• they’re familiar with the state’s real estate statutes, court interpretations of the common law, local and federal regulations;
• they offer protection and guidance throughout the real estate investment process;
• they’re able to review and identify issues contained in contracts, title, and loan underwriting; and,
• they’re able to draft additional documents that carry out a real estate investor’s plan.
2. Incorporate the 3R’s into your Operating Agreement: Roles, Rights, and Responsibilities
If you’re part of an investment group formed under a limited liability company (“LLC”), it is imperative that your operating agreement defines the roles, rights, and responsibilities of each member of the group. Taking this precautionary measure will ensure members do not breach their fiduciary duties toward one another and the LLC.
3. Have an Exit Strategy
Start the investment process with the end in mind. It’s important to know what exit strategies are available to you as an investor (and your partners, if any). It is also essential to implement thorough and comprehensive steps to remove yourself from a real estate deal if you’re unable to complete a real estate transaction because a partnership goes sour or a partner becomes medically incapacitated or dies.
If you are a Central Florida real estate investor, who needs help implementing any of the steps noted above or in need of legal advice, feel free to contact Kimberly Soto, Esq. at The Soto Law Office, P.A. for a free 15-minute consultation.