THE CASTLE KEEP ASSET PROTECTION STRATEGIES GARRETT SUTTON
But for today, without the expense and zoning issues of actually building a castle, what is the best way for you to hold real estate? There are several scenarios for real estate investors with varying asset protection options, so let’ s look at a new client of mine who uses a few of the different options himself.
Sammy is an astute real estate investor. He had started out as a carpenter working for a company that both built homes and filled in their time with remodeling jobs. He soon realized that the clients who spent $ 10,000 with the company to remodel a property were turning around and making $ 50,000 when they later sold the property.
Sammy liked his job, but even more so, he liked to make money. So he started by buying a rundown property at a discount that he could fix in his spare time. While he experienced a few setbacks and some learning pains, when the remodeling and painting was completed, Sammy had a $ 20,000 profit after the sale.
That was enough to launch Sammy into his new career. Since then, Sammy has been buying distressed properties, fixing them up and selling them. In the last six years, Sammy has also been fixing up duplexes and 4 plexes and keeping them for his own portfolio. To further his real estate options Sammy has also started building spec houses for sale and profit.
Sammy has assembled a good team of professionals. He has learned from his CPA and attorney that each of his three real estate activities – remodeling for quick sales, holding and keeping, and building homes for speculation, or spec home sales – require a different legal strategy and a different means of taking title. His strategy is as follows:
1. Remodel for quick sales. This is the strategy Sammy had first started with and it continues to constitute a significant portion of his profits. Still, as more new investors are getting into“ fixing and flipping,” the sale prices for distressed real estate are increasing. Sammy knows what his margins are and won’ t bid on dilapidated yet overpriced properties as others have done. Nevertheless, there have been plenty of good fixeruppers in his area to acquire.