With the hot housing market, people are buying and selling homes in Wisconsin at an increased rate. The current housing market brings real estate investors, new and seasoned, plenty of opportunities.
Investing in real estate can provide you with long-term security and income, or it can lead to financial headaches. Fortunately, there are steps that you can take to protect yourself from lawsuits.
Don’t Skip the Home Inspection
Whether you plan to live on the property or rent it out, it’s critical to have a home inspection before you sign the contract.
In the rush to beat the other buyers, many real estate purchasers chose to waive the home inspection contingency in their contract. This meant that they would buy the house without having any inspection before purchasing the property. If they did have a home inspection done, they may have waived their right to ask the seller to repair the property. This type of offer may appeal to a seller and get you the contract; however, the cost of this shortcut may be great.
Home inspections can delay closings in the short term; however, in the long term, you are potentially saving yourself tens of thousands of dollars in repairs.
For real estate investors, on top of having unexpected repair costs, you also open yourself up to legal liability. If you’re renting a property out to a tenant and a leaky pipe causes a ceiling to collapse on them, you may be stuck paying the tenant’s medical bills in a lengthy lawsuit.
Get the Right Type and Amount of Insurance Coverage
Having adequate insurance coverage can be the difference between asset protection and bankruptcy. As a real estate investor, you have a responsibility to those who are renting or occupying your property. Remember that tenant from earlier? If you have the right insurance policy, then the insurance company will cover all or part of the tenant’s bills. With the wrong insurance coverage, though, you may be stuck with the bill.
Making sure that you’re aware of the condition of the property before buying or renting it out can protect you. If the insurance company thinks that you’re responsible for the accident, then it may refuse to pay. This may leave you with two choices: pay the bills out of pocket now or face a lawsuit.
Check your insurance policy to see what your coverage types and limits are. The attorneys at Mallery, s.c., can help you understand if your insurance coverage is enough to protect you.
Invest in the Right Property Management and Maintenance
Even with a home inspection, things happen. After all, pipes leak. Floors need replacing. Heaters stop working. These things come with the territory of owning property. For real estate investors, however, it’s important to take steps to prevent these things from becoming litigious landmines.
If you can’t manage the property on your own, invest in a property manager that you can trust. A property manager can be the go-to person for your tenants. They can free up your time and give your tenants confidence in your ability as a landlord.
Having an on-call or reliable maintenance team can also save you time and money. Maintenance teams you can count on can help limit the chance that minor repairs will become major repairs.
Form an LLC to Legally Own the Property
Forming a limited liability company, like all the other steps so far, can protect you from lawsuits. A limited liability company is a type of business entity that allows for greater protection and flexibility. If you own real estate property in your name, you bear the costs of repairs directly. You—and your personal assets—are on the hook if an accident injures someone on the property.
If an LLC owns the business, however, the LLC may bear the cost of a lawsuit. Setting up an LLC to own the property can add an extra layer of asset protection. To find out how to protect your investment by setting up an LLC, call the real estate professionals at Mallery, s.c.
How Can Real Estate Investors Protect Themselves from Lawsuits?
Taking the time to have a professional inspect and repair the property can limit the chance of a lawsuit later. Likewise, taking out the right insurance policy can stop a lawsuit before it happens. Forming an LLC also adds a layer of protection between the property and your personal assets.
Call Mallery, s.c. for Asset Protection You Can Trust
Don’t leave your real estate investment’s protection up to chance. Our team takes pride in our unmatched attention to detail, putting our client’s best interests before all else. Our team consistently receives positive recognition. For example, in 2002, our firm was named one of U.S. News & World Report’s best law firms. We take the time to understand your priorities and needs first, incorporating those into our representation.
Call our exceptional business and legal advisors today.