Investing in real estate is an important decision. Locating the right property for investors and selling investment properties is something you'll be doing as a real estate agent. Knowing what you don't know is as important as knowing what you know. Good advice is crucial to making the right investment decision and maintaining that investment.
Consulting an attorney is important any time you buy property, for such things as preparing the sales contract and examining the title to the property, and doing so becomes even more important whenever you're buying property with a partner or several other people (see "Partnering Up: Real Estate Investment Organization Structures," later in this chapter). Consulting an attorney to set up the proper organizational structure for an investment can save you some grief in the long run. You may also want an attorney to review any leases that exist in the building you buy.
The use of a good accountant likewise is crucial because of the tax implications of owning investment property. I talk about tax benefits in "Getting Uncle Sam's Help: The Government's Role in Investing," later in this chapter. The thing to remember is that the value of the tax benefits, such as depreciation, derived from the same building sometimes varies from one owner to the next. You can find out more about depreciation later in this chapter in the section "Feeling worn-out: Depreciation." The benefit of a tax deduction for a particular building may be greater for Investor A than it is for Investor B. An accountant familiar with real estate investing and your particular financial situation is necessary to maximize your profit on an investment property.
The three people who need to be consulted in making real estate investment decisions are a real estate agent (that's you), an attorney, and an accountant. These professionals need to be consulted as early in the process as possible. I cover the agent's role in finding property and handling management issues in the previous two sections, but you also need to check out the roles of an attorney and an accountant. Make sure you always refer your clients to these professionals as soon as possible.
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