Asset Protection For Real Estate Investors, Builders & Developers
Of all the professions, specialties and businesses out there, the Real Estate related folks may be benefiting the most from solid asset protection. Real Estate professionals like Investors, Builders and Developers are already familiar with some of the most common asset protection tools like Limited Liability Companies.
They are also familiar with the concept of keeping assets isolated and separate for the sake of protection. Every developer knows that each project should have its own LLC. If one “bad apple” project goes under it doesn’t infect the other good apples as well.
But that is usually where most of the planning stops. Very few real estate businesspeople have taken the next step in the process and linked those LLC’s upstream with the more sophisticated asset protection structures.
The bad news is that many real estate pros are finding out the hard way that just doing an LLC for each project does very little when in comes to protecting their other hard earned assets.
The good news is that in many cases we can still connect some of the dots, depending on the circumstances, and add asset protection, even with some problems on the horizon.
Asset Protection is Critical
The bottom line is that for Real Estate people asset protection is now mission critical. For many of my clients in the business, their planning is literally saving the assets! The crash and current crisis has created more underwater real estate than most people thought imaginable. The silver lining on this is that if you do find yourself underwater, with a solid asset protection plan the overloaded banks are much more flexible when it comes to negotiating your way out of problems.
Banks are looking for the “low hanging fruit” just as much as the next guy. They are overloaded and have to make decisions where to dedicate their limited resources. Today that means the cases that are easiest for them and have the highest probability of paying back. With a solid asset protection plan in place, you are much less likely to seem to them like that low hanging fruit.
If you have real estate which is underwater, I would recommend that you act immediately and get an analysis of your situation. What you can and cannot do is highly specific to your situation, but timing is critical.