Month: September 2023

What to Know About Buying Rental Property Outside of California

Posted on September 29, 2023 by - Estate Planning

Real estate investment can be a great way to grow wealth and even provide a steady stream of passive income. However, as every Californian knows, real estate prices in the state are often prohibitively expensive, leaving many people with few options. As a result, it is often necessary to look outside the state for more affordable opportunities.

For those who are drawn to the idea of buying rental property outside of California, here are a few critical points to consider.

1. Know the Market

Real estate values vary widely from neighborhood to neighborhood, even street to street. Most of us understand this intuitively regarding the area where we live, but it can be easy to lose sight of this fact when searching for property in another city. Without local knowledge, it’s easy to get lured in by a “great deal” that turns out not to be so great. Alternatively, there may be a part of town where real estate prices will likely  skyrocket in a few years, but you wouldn’t know about it.

If possible, it’s better to buy property in an area that you are already familiar with. If not, it’s a good idea to get to know the place and try to be physically present as much as you can throughout the process.

2. Find a Good Agent

Having a real estate agent you can trust is always important, but it is doubly so for people buying an out-of-state investment property. Tying in to the point above, a good real estate agent can be an invaluable source of knowledge about the local market. They can guide you toward great opportunities and steer you away from a money pit.  The wrong agent, or even just an indifferent one, may prioritize closing the sale over looking out for your best interests.

What’s more, your relationship with a real estate agent can be a great start to building a local network of connections. From inspectors to contractors to property managers, you’ll need a lot of help to make your rental property a success, and a good real estate agent can put you on the right path.

3. Property Managers Can Be a Big Help

It will be tough to administer an out-of-state rental property on your own. For starters, someone has to be on hand to show the property, collect rent, inspect the property for damage, etc. If maintenance issues crop up, they must be dealt with promptly, which may be challenging to orchestrate from another state. Also, you’ll need to be familiar with state and local laws regarding leases, evictions, and more.

Hiring a local property manager simplifies all of this. For a fee, often a percentage of the monthly rent, property managers will find renters, oversee the signing of the lease, collect rent, send maintenance workers, and take care of other problems as they arise.

4. Tax Implications

Owning an out-of-state rental property can be a great investment, but it will complicate your annual tax return. If nothing else, you will almost certainly have to file a return in the state where the property is located. 

You’ll want to take advantage of deductions for depreciation and other associated costs, such as fees paid to a property manager. If you operated at a net loss for the year, you may or may not be able to deduct that loss from your other earnings (like salary). To navigate all of this without incurring the wrath of the IRS, you should strongly consider hiring a tax professional.

Talk to a Real Estate Specialist

If you are considering purchasing a rental property, whether it’s in California or elsewhere, our team of experienced real estate attorneys can provide the expertise and assistance to make the process go smoothly. From minimizing tax exposure to reviewing contracts, we’ll be at your side every step of the way. 

Contact our office today to start putting your investment plan into action.

4 Reasons Your Business Might Need a Lawyer

Posted on September 15, 2023 by - Business Consulting

As businesses grow, so do the legal complications and the potential pitfalls. For all but the smallest of these businesses, the question is not if your business needs a lawyer but when you should call in their services.

Most small to medium-sized businesses don’t need to hire full-time, in-house counsel.   Still, they should strongly consider forming a relationship with an outside attorney who is familiar with their operations and can provide assistance on an as-needed basis. 

Here are some of the top reasons your business might need a lawyer.

Business Formation

When your business is just starting, or if you are considering changing the way it’s organized, there are many decisions to make that can have significant consequences in the future. From a sole proprietorship to an LLC to incorporation, all of these structures have advantages and disadvantages in terms of taxation, liability, etc. It is a good idea to sit down with a business attorney to discuss your options and get help with the paperwork.

Similarly, if you are considering forming a partnership with other individuals, it is well worth your time to meet with an attorney and work out the details of an agreement. One of the best services a lawyer can provide in this situation is to help you and your business partners plan for potential conflicts and unanticipated events. What happens when one of you wants to sell their share of the business? What happens if one of you dies? How do you proceed if you disagree on important decisions? Understanding this in advance can save you a lot of grief in the future.

Compliance Issues

Spanning a myriad of areas, from taxes to HR to data privacy, compliance issues are the bane of many business owners. They are often viewed disdainfully as bothersome government interference that pulls resources away from the business’s core mission. Whatever your feelings may be on the topic, the consequences of noncompliance can be pretty costly for a business.

An attorney who understands how your business works can, first and foremost, bring compliance issues to your attention that you may not have even been aware of yet. Later, they can help you create policies and procedures that help keep your business on regulators’ good side.

Workplace Disputes

Employment law is a fraught area for businesses. Conflicts with and between employees have a high potential for future legal disputes. 

For example, firing employees is an unfortunate necessity that comes with running a business, and it should always be approached as the precursor to a lawsuit. Everything you do or say may come up later, so it’s essential to go by the book. However, that can be hard if you don’t know what rules to follow. Consulting with an attorney will help you navigate this situation without exposing your company to a lawsuit.

Similarly, dealing with problems between employees can be just as important. For example, if an employee complains that they were harassed in the workplace, it’s crucial to handle this properly and not just wing it. Draft policies in advance with the help of your lawyer, and then have their phone number ready if a situation arises.

Lawsuits

Some consider it a rite of passage or a sign of success when a business is sued for the first time. Indeed, the longer your business is around and the higher its profile, the more likely this will happen. 

If you or your business receives notice that it is being sued, the next thing you should do is contact an attorney. If your business already has a lawyer, you will be in a much better position than if you shop around for one while the clock is ticking.

Southern California Business Attorneys

Your business is too important to leave anything to chance. Having an experienced attorney who can advise you when needed is critical to protecting your business and building a sustainable foundation for future success.

Our highly credentialed attorneys have been proudly serving the Southern California business community for years. With broad-ranging experience in a variety of practice areas—from commercial real estate to civil litigation—Hoffman & Forde can provide the legal expertise your business needs.