The Worst Property Investment Legal Mistakes
When it comes to the legal side of property investing, you want to make sure everything is done right.
Yet, over the course of the last 16 years, Nathan has seen plenty of foolish mistakes made by investors who weren’t so careful.
Here are some of the biggest.
Using a conveyancer.
Don’t get us wrong – we’ve got nothing against conveyancers. It’s just that they don’t offer the same value as lawyers do.
Lawyers are able to do things that conveyancers can’t, such as hold funds and give legal advice.
Nathan says he would always choose a lawyer over a conveyancer – because it’s not all about property, it’s all about investing.
Not being careful about property contracts.
Nathan says he has seen people make silly mistakes when dealing with property contracts.
A contract of sale is very important. When you think about it, there could be millions at stake.
It is important to think about how much your assets could be worth in the future. How much profit will you derive from these? If something gets messed up in the contract, this could have an ongoing effect on your wealth.
Not making the most of opportunities before settlement.
Investing is not just about purchasing a property. Negotiations don’t have to end once the deposit has been laid.
A good lawyer can help you make the most of the period before a property settles. For instance, they could extend the period of settlement and help you negotiate a better deal based on the results of a pest and building report.
It’s always good to know what your legal rights are during this time so you can take advantage of opportunities to get a better deal.
Not structuring purchases properly.
Whether you are buying as tenants in common, buying as a joint ownership, buying solely under your name, or buying under a trust, there will be different limitations involved.
It is detrimental to know how this will affect your position moving forward – especially if you are planning on buying more down the track.
A good lawyer who understands your goals can give you advice on the best way to structure each acquisition so you don’t make any costly mistakes.
Not understanding risk.
A lot of people don’t take a proper look at the risks involved with property investing. Not only are there risks and limitations during the time of purchase, but there are also others you may come across during the long-term process of managing an asset base.
A good lawyer can help to cushion you from these risks by identifying them and developing risk management strategies.
Not writing a Will.
While most people don’t like to think about dying, it is important to look after your family and your financial position well after you have gone. And, since you can’t actually do this once you are dead – you have to do it now, while you are still alive.
If you have put time and money into building an investment portfolio, you should put time and money into making sure it goes to loved ones when you die.
Even if you don’t have assets, you probably have some Super and a life insurance benefit tied to it. Who would you entrust the welfare of your kids to? This should be set out in a Will too. A couple of hundred dollars in legal fees is surely a worthwhile investment for the welfare of your loved ones.
Have you known someone who has made a costly legal mistake? Please share your experiences in the comments section below.