Self Help

You may think that adding an attorney to your real estate investment team seems like an expensive luxury that you can’t afford. Indeed, you may be able to purchase properties when you’re just starting out as a real estate investor without consulting an attorney, because buying a small rental property is often not much different from purchasing your own home. The process is relatively simple with preprinted forms that seem so easy to complete. And you usually have an experienced real estate agent to guide you through the process.

For simple transactions, the retention of an attorney is strictly a function of whether attorneys are traditionally involved as the intermediary or closing agent. If you live in an area where attorneys aren’t usually involved in real estate transactions, then an attorney may not be necessary. In some states, it’s essential to have an attorney actually handle the transaction and closing.

But it is strongly recommended that you consult with an experienced real estate attorney as your investments increase in size and complexity. With more complicated transactions, have the attorney review the documents - even in states where the title or escrow company handles the paperwork and serves as the independent intermediary or closing agent. A good real estate attorney can help you structure proposed transactions. Particularly if you’re looking into a large transaction where you assume loans or you’re attempting to secure special financing, a competent real estate attorney can be invaluable.

There is nothing your attorney can do to avoid legal snafus and expensive litigation if he isn’t hired to draft, review, and negotiate the terms of your proposed transaction in advance. Although such a review may cost you some money up front, it’s definitely much more economical than having to hire an attorney to get you out of a bind.

Seek an attorney who specializes in real estate purchasing and lease transactions. Ideally, you’ll find one attorney or law firm that can assist you not only with your transactions, but also with the drafting and review of other documents as you operate the property. In particular, look for attorneys who have specialized knowledge of tenant-landlord laws and the complicated issues surrounding commercial leases.

Check references and find an attorney who has excellent communication skills and can explain complicated legal terms and documents in terms you understand. As with any professional, the old adage that “You get what you pay for” holds true more often than not. So remember that the lower hourly rate attorneys aren’t necessarily your better option, because more expensive, yet more experienced, attorneys are your best bet when you’re investing in large real estate transactions.