Our Top Tips for Finding & Vetting A Good Lawyer
19 min

In this episode, we wrap up our series of finding an vetting solid vendors with the lawyer. Join Emil, Tom and Michael to learn their strategy of finding a good lawyer. 

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Transcript

 

Emil:

Hey everyone, welcome back for another episode of The Remote Real Estate Investor. My name is Emil Shour, and I'm joined by,

 

Tom:

Tom Schneider,

 

Michael:

and Michael Albaum.

 

Emil:

And today we are going to be continuing our series on tips for finding and vetting different members of your real estate investing team. Today we will be covering the lawyer. Let's hop into it.

 

Michael:

Tom, what is in your hand?

 

Tom:

What?! What are you talking about?

 

Michael:

Looks like you have a tail.

 

Emil:

What is going on?

 

Michael:

Is that a crop for like a horse?

 

Tom:

It's this thing called an Orange Whip. It's it's actually pretty fun.

 

Emil:

I hope you don't use it on your child.

 

Tom:

No, no, no, it's a golf tool that I just kind of hold at my desk, and it has tons of wiggle waggle.

 

Michael:

Mm hmm.

 

Tom:

So when you swing, I'm kind of a gimmick guy like a golf gimmick guy so like is that they buy something you know, like a straight jacket that helps you whatever your swing, I'll buy it. I got this thing recently called. And I'm very pro Orange Whip it. So when you swing back, this orange ball that's has like a ton of wiggle waggle. It makes really good tempo and improves your swing. So you're not coming over the top, you got a nice inside out swing.

 

I'm funny with golf. I don't play like that often. But when I do, like, I just like, you know, go all out. And so like 10 months of the year, don't really play it. But then two months, like, oh, man, I need this gimmick. I think I figured out and yes,

 

Michael:

I was gonna say I've known you for a couple years and not once have I ever heard you mentioned golf.

 

Tom:

I mean, we must have not talked during that little month sequence that I was really into it. But as a shout out there, Orange Whip. This isn't a paid promotion. But I think if you're in a golf and you want to have good tempo, and strengthen, get an Orange Whip, I'm pro Orange Whip. So that's what's behind me.

 

Emil:

You're gonna love this. So my brother in law started this little it's another gimmick. It's called putt cup.

 

Tom:

I’m in, Ooh.

 

Emil:

So a mug that has a flat brim so you can lay it on the ground and just practice your putts. You know if you'll put mugs on the ground, but it has this flat side to it. So you get a nice roll in there.

 

Tom:

That's beautiful. At first I was thinking oh, there's a hole in the cup. So when you putt it goes in, but that doesn’t make sense.

 

Michael:

Wouldn't be a cup anymore would it? It’d be more of a funnel.

 

Tom:

Where does he sell it on?

 

Emil:

Amazon. You just go look up putt cup.

 

Tom:

I'm in.

 

Emil:

Another gimmick for you.

 

Michael:

Also not a paid promotion.

 

Tom:

Yeah, another amazon.com!

 

Emil:

Have you heard of it?

 

Tom:

Have you heard of it?

 

Michael:

It's a little book company.

 

Emil:

Small boutique retailer.

 

Tom:

Related to Amazon is this thing called fake spot. So an Amazon companies could like spam a bunch of high ratings when they have their product. But there's this thing called fake spot that you I think I posted on that Academy Slack channel that will analyze if the ratings are fake, and it gives a true ratings by looking at and getting rid of the bots. It gives you an honest take. So Orange Whip, fakespot, and Amazon. Those are my three recommendations for today.

 

Emil:

Okay, guys, well, we could be talking about golf and Amazon all day. But people are here for our real estate knowledge, or lack thereof. So let's talk about how you find and vet, a lawyer. We’ll break it down into three parts. So when in the process of your real estate investing journey or buying a property, should you look for this person? How do you source? So how do you go out and find a lawyer? And what are the best questions to ask to make sure they're legit, and can help you and be a valuable member of your team? So let's start with when in the process. Should you find the lawyer? Do you guys have went Have you guys done this in the past?

 

Tom:

All right, so I'll jump in first. If you are investing passively, you're holding properties in your own name, you know, it's not necessary that you buy them in an LLC, I would argue that within your checklist to get going as a remote real estate investor, getting an attorney in place is not high on that list. And that you don't have to do it before you start evaluating. You don't have to do it before you start buying. If you are looking to own these properties into a more complicated structure, with either LLC is sure you're going to want to have an attorney either to help you, you know, set up your LLC or using like a Legal Zoom or one of those type platforms.

 

But if you are like myself, and perhaps you own a couple of properties, not in an LLC, you have it in your own name. It's not necessary to have get a lawyer upfront, or even after you own. You know, it really depends on what you're doing and what your threshold for risk as it relates to having things in your own name. You know, as far as timing, I would say it depends and it's not necessary to do upfront.

 

Michael:

So I'm going to take the counterpoint to a slight degree. I think it depends on what your risk tolerance looks like and what your starting assets look Like, if you don't have a whole lot to your name, it's probably less important to go chat with an attorney prior to. But if you do have a lot to your name, you could have a bigger target on your back. And so, I think just understanding what you're getting into the risks you're taking on, and what structure if any might be appropriate for you, those can all be really great questions to ask on the front end, prior to purchasing. And just as if you're looking to get involved with real estate as a whole, again, good questions, to be asking questions to go get answers to just so you're coming to the table with all the information or as much information as you can.

 

And so having a consult with an attorney doesn't have to be yours. But one, a real estate attorney in general, can be really great, and how do I protect myself, but also understand that they are likely going to try to sell you something, all kinds of asset protection, and they often will use scare tactics. So take everything you hear with a grain of salt and go talk to other investors about what's actually happened in their world.

 

Tom:

Another thing to think about is, what are the different use cases that you're going to be using attorney with, so one of them would be on the front end, you're, you know, setting up a structure, maybe you're putting a fund together, maybe you're putting together a single member LLC, you know, that's a use case of using an attorney. And if you're not going through that, it's not necessarily that you find one other use cases that come in with an attorney is perhaps you buy a property, and there's an eviction with the tenant or some kind of issue like that, more likely than not, your property manager is going to have some legal, you know, representation, or kind of like a third party that they'll use to manage the process of eviction or three day notices and all that stuff. So it's not necessarily that you personally have an attorney to do this, your this is something that you're paying your property manager to do, they're gonna forward some of those costs to you, but they're going to get kind of better, better pricing, because they're like at scale, and probably have like, pre made templates for a lot of this kind of stuff. What other use cases would you be using an attorney with you guys think of?

 

Michael:

That's like, 85% of my experiences with it, I've used mine in an insurance issue, I had to bring in my attorney and just be like, Hey, I'm not getting the service and answers to the questions that I'm posing. And then also with a contractor that I had to fire, they were saying, they're asking for all kinds of stuff, and I ended up firing them and I copy my attorney, and you have to pay me and I said, That's not gonna work like that. And here's my attorney. And so if you'd like to say anything, you could say to both of us kind of a thing. And that solved that problem pretty quickly.

 

Emil:

And that was the end of that,

 

Tom:

On the front end, if you're buying with, you know, friends, or whatever creating a fun, so structuring that whole thing. I guess I'm repeating myself again, I did that before. But

 

Michael:

Yeah, I think I think structure is a huge part of it. And so making sure that you get that right on the front end is super, super important. And so I've used my attorney for that. And I'll shamelessly plug her here. Her name is Kelly Chrisman. And we actually have her on episode 41. Should you put your properties into an LLC. And so she talked about all things real estate in LLC and trust related there, but so we were talking and it's so one word can change the meaning of an entire contract. So making sure that that's right and designed to protect everybody involved in it actually is designed to do what it's intended to do is really important. So I've used done that in the past and setting up multi member LLC partners have have her structure that and draft up those documents.

 

Tom:

On those documents, there are some good hybrid approaches, such as LegalZoom, and Rocket Lawyer where they have these templates that are pretty much ready to go. Be it tenant related templates, which you're not going to need if you're using a property manager, but setting up an LLC and that kind of stuff. It's a nice hybrid approach, which might be a little bit more cost effective than bringing on an attorney where you're paying $500 an hour or whatnot. Just because, you know, setting up an LLC is kind of a punch and play thing where this it's a well worn path where these hybrid approaches where you could buy these templates can be more cost effective.

 

Michael:

Yep, I would agree.

 

Emil:

I'll just, I'll speak quickly to my own personal experience, I wouldn't say this is the right or wrong way to do it. But just so our listeners kind of have an example of, you know, when in the process, one of us use it. So for me, I bought four properties in my name, no LLC, just directly in my name. And after my wife got married, had our daughter, we started really thinking about, you know, what are some of the legal implications of having all these properties in just my name, you know, we had a family member who went through probate, which again, if you want to learn more about that, Episode 41, like Michael talked about, and so I really wanted to avoid those things.

 

Once family came into the picture, you start thinking a lot more about these things. And so that was the point for me, which was actually earlier this year, that I decided to enlist the help of a lawyer to help us create a trust so everything you know, in case, knock on wood, anything happens to me, it flows directly to my family without much hiccup or headache. So that was kind of just my my personal journey into when I picked up working with a lawyer and..

 

Michael:

In episode. 40 We also talked about trust stuff. And we talked about in that episode about anyone who's investing in real estate should absolutely investigate whether or not a trust is a good fit for them. I think probably it's going to be,

 

Emil:

Especially if you have a family and again, you, you know a lot of these properties in your personal name. And there's all this like, legal stuff that can happen if you don't set it up properly. So good idea.

 

Tom:

It's interesting how much of real estate like strategy wise, it's like, next generation, you know, just like…

 

Michael:

Yeah, after you die.

 

Tom:

Totally. Yeah. But I mean, what a great gift that you can give to your family's future. I think talking about defer, defer, defer, and then you die, you know, with regards to 1031s and taxes. So anyways, short commentary, there

 

Micheal:

It’s the gift that keeps on giving, you know, real estate.

 

Tom:

Yeah.

 

Emil:

Anytime you talk about legal stuff, it's always just such a happy episode.

 

Michael:

It's always the doom and gloom and morbidity, right?

 

Tom:

What's consistent in life, death and taxes?

 

Michael:

Death and taxes.

 

Tom:

That's it. There we go. Next episode.

 

Emil:

All right. So let's, let's move on to how do you source How do you go out and find people to interview? So how have you guys in the past? You're looking for a lawyer? What did you do?

 

Michael:

I got super lucky, my older brother had a good friend who I'm also friends with. And one of his good friends from college was a lawyer. So I reached out to her, we started chatting, and that was Kelly. And we've been good friends. And I've been a client of hers for a long time. So it's great that she's very young and but experienced, and so she's going to be around for a while, and looking to grow as well. So I don't have to work with someone for five years, have them retire, and then go look for another attorney. So she's been awesome to work with. She's super, super great. I highly encourage anyone who's interested or looking for an attorney to listen Episode 41, where we share our contact information reach out to her directly.

 

So I just happen to know someone, I didn't really have to do a whole lot of interviewing, and we kind of just grew together naturally. And it was a really good fit. Tom, what about you?

 

Tom:

I would go back, we've talked about in some of the other episodes of the hierarchy of where to identify these type of vendors. So at the top of that is personal relationships that you may have. And when I worked at one of the single family REITs, got to know the attorney, actually, we might actually have him, come on to the episode, he didn't come on the podcast soon. He's the general counsel at Mynd Property Management, where another great resource is professional references and then looking at forums BiggerPockets, brucite, Academy members have access to our Slack channel, and then just general view, so I say those are the key spots in descending order of what I'd recommend for identifying a lawyer.

 

Emil:

I think the big theme, and we're hitting on it in all these episodes is the power of networking and asking either the people you work with or networking with other investors who they know because they've worked with them, they have experienced with them, right? It's not like you're just going on Google and who's the first name that comes up, or the first ad that comes up, and it's just so powerful to network and ride the coattails of others, if they found good people.

Michael:

Yeah, you don't need to reinvent the wheel.

 

Emil:

Alright, cool. That was a fast section. So moving on to the last part. What are some good questions that our listeners can ask? When they're interviewing a lawyer to make sure that's the right person to bring on to their team?

 

Michael:

For me, I think the first question is, do they work with real estate investors? Because there's all kinds of attorneys out there that specialize in different disciplines, just like you have all kinds of different doctors, specialists. You know, if you had a problem with your hearing, you wouldn't go to an orthopedic surgeon, probably I don't know, I that's my guess. There's not medical advice. So same thing with attorneys, and accountants, and really all the team members were talking about these episodes for that matter. So making sure that they specialize in real estate, and specifically working with investors I think is really important because they're going to look to do certain things for you that are going to be different than if you were an owner occupant.

 

They're going to treat you in a very specific way and look to structure things very specifically for you as an investor. And so when they have that experience and background, that's going to be really helpful for you. I also like asking where they can work, what states can they work in? Are they licensed in multiple places? Are you in California and the attorneys in Colorado? Does that pose any issues? also asking what their fee structure looks like? That's a big one we talk about with a lot of the vendors we speak about working with, are they hourly do they want to retain, do they charge by 15 minute increments? You know, how do they bill? And what does that look like? And then asked if they charge flat rates for certain services like setting up an LLC, asking them what their typical turnaround time is on inquiries and how they best like to communicate. If you text them a question, you get charged for that, if you call email, what's the best way to get ahold of them? Tom, I don't want to give you the scraps again. So I'll make sure you get in here

 

Tom:

I’m coming up with some fresh stuff. So some Attorneys Offices, there might be multiple attorneys. So here's an example of a question I like to ask him. If there's multiple attorneys, you know, is there different rates, so if the office perhaps has multiple attorneys, maybe there's a younger associate, that they do more template work, or more kind of bread and butter work at a lower rate? That's something to ask us, you know, are there many attorneys that I have resources with, because you know, with law, there are different types of specialties. So perhaps, if you are one a slightly more expertise on particular areas, it could be a bigger law office that has more resources versus a kind of a one man show or one woman show that's that's doing all the different work.

 

This is just a way to evaluate different attorneys and what their resources are. I would also ask them about some specific use cases that they had, in working with investors, have they done the initial contract work upfront in structuring funds? Have they done any work as it relates to dispute management with property managers or contractors? Have they done any work as it relates to eviction is just kind of go through their repertoire of what they have competency in, in law? And just let them speak? Kind of get them started? And let them talk about it?

 

Michael:

And I think it's fair to say, Tom, would you agree that most attorneys during this kind of interview phase are not going to charge for their time?

 

Tom:

No, I would be overt and clear that, hey, you know, I'm in the process of evaluating. I'm speaking to two other attorneys, and may or may not be speaking to two other attorneys, but that's between you and me. And just let them know that you're kind of in that evaluation phase.

 

Michael:

Yeah. Yeah. I totally agree.

 

Emil:

Solid.

 

Tom:

And references, references, get some references. Love that, you know, can't say that enough. for everybody. That's like, honestly, the biggest sort of BS detector is if you can get a reference who isn't their grandmother, or niece or nephew or whatever, you get a real reference and talk to them.

 

Emil:

Solid. I don't have anything to add. I'm glad you guys. One note I had was expectation setting. But I think Michael, you talked about it like, like, let's say you decide to work with them, if you email or call or text, like, are they going to charge you for those 15 minutes, or whatever it is? Or like, you know, for smaller stuff? Within reason, right? Like, if you're emailing them every week or something, okay, it's probably fair that they charge you but like, if you have a question every couple months, are they going to like charge you or that kind of just part of working with them? Anything else? Add here, guys, before we wrap up?

 

Tom:

I think that's good.

 

Michael:

I think that's good. And I would say, you know, if you're questioning it, just go reach out. It's one of those things like legal and accounting is one of the two areas where it's kind of a pain in the butt because they're expensive to deal with. But the things that they'll be able to do for you and answer for you are well worth the expense. And we are not experts, as real estate investors in the law. We are not experts, as real estate investors in accounting. So we need to go find people that are and finding good ones, they are well worth the cost. And so just kind of bite the bullet and keep track of those expenses because they are all deductions.

 

Tom:

Yep,

 

Michael:

It often ends up paying for itself in the long run. And this is your and your family's financial future. And so don't skimp out on a couple hundred bucks of an attorney to try to go do it yourself to then potentially have a get messed up down the road. It's a small expense in the grand scheme of things when it comes to the risk that's being mitigated.

 

Tom:

Pennywise pound foolish Don't be penny wise pound foolish.

 

Michael:

That's right. That's right. Man I should have been an attorney.

 

Tom:

Let's go study bird law.

 

Michael:

That's right, bird law!

 

Emil:

Cool. So let's wrap this one up. We're doing a little giveaway for people will leave us review right now we're at 93 ratings on Apple podcasts. And we're trying to get over 100 so the next 10 people will leave us reviews. We're going to randomly select two people and send them some cool stuff, maybe some books and some some swag and stuff like that. So if you haven't already go leave us review on Apple. We love hearing from you guys. And as always, we'll check you guys out in the next episode.

 

Michael:

Happy investing

 

Tom:

Happy investing

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David McKnight
My Post-Mortem on the Presidential Election
At the time of recording this podcast the results haven’t been certified but it looks like Joe Biden will be the next US president. There are a couple of different outcomes that you need to pay attention to. The first involves him not controlling the Senate. In order to win the Senate Democrats would have to win two seats in a runoff election on Jan 5 but pundits are saying that result is unlikely. If Republicans control the Senate there will be a lot of obstruction for Joe Biden’s agenda. Everything that Joe Biden campaigned on is going to be effectively neutralized and he will probably have to postpone any changes until the midterms two years from now. This means you can expect two years of relative status quo, but if the Democrats do win those Senate seats in the midterm elections or want to press his program, he will likely try to make the most of the opportunity and push through his agenda more aggressively. If you make more than $400,000 per year, you are essentially a marked man or woman. For example, if you live in California you will have to pay a 13.3% State tax, a 39.6% Federal tax, an additional 14% additional Social Security tax for every dollar over the $400,000, and finally a 3.8% for an Obamacare surcharge. This scenario results in 1970s style tax rates where you would be paying 70.7% in taxes. You will also have fewer ways to mitigate that tax and be unable to deduct 401(k) contributions on the margin as well. Joe Biden has proposed considerable changes to the way 401(k) deductions are done so we are going to start to see deductions phasing out for people in the higher income levels. Joe Biden wants to be able to tax you at high marginal tax rates and doesn’t want to give you a lot of recourse in terms of mitigating that tax. If you have significant income, your long term capital gains could become short term gains. If Joe Biden wins the Senate he will have two years to put this into law but in the process will likely upset a lot of people and potentially lose the Senate after the midterms, however this means that for the first two years you better duck and cover if you make $400,000 a year or more. If you make less than $400,000 a year, a Joe Biden presidency is relatively good news for you. Joe Biden plans on letting the tax cuts expire for the people that make $400,000 or more but for those who make less, he plans on making the tax cuts permanent. This could make contribution to your 401(k) a bit more complicated and for those above the $400,000 threshold they will probably want to consider some other options. In terms of the Power of Zero paradigm, it is largely good news if you believe that Joe Biden will make the tax cuts permanent for those who make less than $400,000 per year. We can’t afford to keep tax rates this low and have actually gone beyond the point of no return. We would have to tax 103% for every dollar made over $400,000 just to prevent the deficit from growing. This doesn’t include actually paying off the debt. Unless you believe in Modern Monetary Theory there doesn’t seem to be any other way to solve our problems other than ultimately raising taxes on the middle class. Joe Biden is kicking the can down the road and it’s going to compound our problems over time, but if you’re looking to take advantage of this opportunity before we come face to face with reality, this is a great opportunity to shift money to the tax-free bucket. If Joe Biden wins over the Senate there’s going to be a lot of shock and awe in the first two years of his administration as they push through a number of pieces of legislation that will disproportionately impact people who make more than $400,000 a year. If he doesn’t win the Senate he will bide his time until the midterms to gain the seats he needs to implement this agenda.
14 min
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