When Investing in Real Estate or Starting a Business, it Pays to Educate Yourself
When beginning to invest in real estate or starting your business, I’m not suggesting that you need to know everything. You don’t. You’ll continue to learn as you go. But you must educate yourself in the basics to get started on the right foot. A little education goes a long way in accomplishing these essential goals:
1. Demystify Investing and Lessen Your Fear
Learning about real estate or running a business will demystify it for you, reducing your fear of the unknown. Without that fear, you’re more likely to take the leaps necessary to progress to the next level and reach your goals.
Where can you get that education? We will be holding a 3-day Seminar for entrepreneurs and investors in Boston called the Tax and Asset Protection (T.A.P.) Class. This seminar includes all the vital lessons investors and entrepreneurs need to know, but are never taught in school. I, Garrett Sutton, and fellow Rich Dad Advisor and best-selling author Tom Wheelwright will be teaching the class. You can sign up here.
2. Know that Ordinary People Can Be Successful
It will show you that you don’t need to have any innate real estate talent or know-how. You’ll truly see that anyone can do this. You don’t need a degree in law, finance or real estate, and you don’t need outrageous sums of cash. Ordinary people, with ordinary reserves of cash, have achieved great results in investing, and you can too!
3. Pick an Area to Specialize In
If you’re pursuing real estate investing, it will help you to narrow down which area of real estate you’d like to specialize in. When you understand some of the unique qualities of each type of real estate, you’re more likely to discover the type and location that best suits your investment style and needs.
The following are your numerous real estate options:
- Single-family homes
- 4 plexes
- Trailer parks
- Commercial office space
- Commercial industrial space
- Storefront retail
4. Niche Down for Better Focus & Expertise
Having a great understanding of your niche and a clear focus will greatly increase your odds of success. This principle is true of business as well.
Going back to our earlier example, you have other decisions to make: what kind of properties you’ll invest in, where, and what to do with them.
Each of these has its own choices as well—apartment complexes vary in size, so are you interested in 20-unit complexes, 100, or more? Starter-market or high-end gated communities? High-rise office, strip-mall retail… your choices are plentiful.
Then you must decide where you want your properties to be. Are you looking for properties nearby in your town, in a neighboring town, in another state, near water, urban, rural?
Now, what will you do with the property? You could:
- Buy foreclosures cheaply, without intending to earn immediate cash flow from them,
- Fix and flip, intending to purchase cheaply, refurbish, and resell for a profit,
- Buy and hold, capitalizing on appreciation, or
- Buy, hold, and rent, earning both appreciation and cash flow.
The Rich Dad strategy is buying and renting, which maximizes short- and long-term income potential. We’ll be covering this topic in much more detail during our upcoming Tax and Asset Protection (T.A.P.) class.
5. Assemble Your Team of Experts to Advise You
It will also help you to identify which experts might be best for your particular kind of investment strategy. When you assemble your team of advisors, one of them will be your real estate agent. He or she will be an expert in one particular sector—the one you’re investing in—but most likely won’t be an expert in other sectors. For example, he or she might specialize in duplexes, but not strip malls. So by sticking with one sector, you can retain the same team of advisors without having to seek others.
6. Don’t Underestimate the Importance of Asset Protection on Investments
You have made your decision to invest in real estate. You know what property you want to buy. Your offer has been accepted. Now what do you need to do to make sure your property is protected from the start? Don’t make the common rookie mistake of putting property in your own name. Instead, protect your investments by establishing proper asset protection.
As Robert Kiyosaki said in the video at the top of this page, “There’s no sense trying to get rich if you don’t first have asset protection in place.”
7. Form your Entity
An entity is a separate legal being, such as a corporation, Limited Liability Company (LLC) or Limited Partnership (LP). All provide much greater asset protection when compared to a sole proprietorship or general partnership. It is the ‘separateness’ of an entity which protects you – the entity’s owner – from unlimited personal liability. Without that separation, if an angry customer sues you, any assets you own such as your house, car or bank account can all be taken should a judgment be found against you. An entity is a business organized according to state law to limit the liability of the owners.
An entity can’t protect you if it is not set up right at the start. Furthermore, it can’t protect you if you don’t properly maintain your entity over the long term.
As it relates to real estate investments, if you are going to be in escrow for a period of time (30 to 45 days) in order to get your due diligence inspections done you will have time in most states to get your entity formed. Also know that Nevada has an expedite service whereby LLCs and LPs can be formed in a matter of hours. Remember, your entity must be in existence at the time of transfer. If you don’t know what entity you need, please contact Corporate Direct at 1-800-600-1760 for assistance or join us in one of our upcoming courses where I’ll be advising people one-on-one.
Again, we’ll be covering these issues in much greater detail in our upcoming T.A.P. class. It would be impossible to cover all of it here. I hope we’ll see you in Boston, or chat with you on the phone if my office helps you set up your entity.
Asset Protection Training by Garrett Sutton, Esq.
The asset protection portion of this course will teach you the strategies and techniques the rich have used for generations to protect their wealth. In fact, no matter what level of prior understanding you have, this course will clearly present key concepts that will help you be more knowledgeable on asset protection than most attorneys. You will learn the appropriate and beneficial use of entities, trusts and other methods for protecting your real estate, business and brokerage holdings, as well as your family and your future.
Tax Training by Tom Wheelwright, CPA
The tax portion of this course will give you a solid foundation for understanding how and why the tax system is set up the way it is. You will learn how to take advantage of the tax laws in order to keep more of your money where it belongs – in your pocket! This course is about how you can create tax savings every day of your life using a few simple real life ideas. Wouldn’t it be great to not only learn how to pay less tax but while you are at it, learn how to reduce your chances of an IRS or CRA audit? Most importantly, learn why the tax law is simply a series of stimulus packages for business owners and investors.