Safeguarding Your Legacy: Risk Mitigation and Asset Protection Strategies for Real Estate Investors

Do you know how to shield your real estate investments and ensure your legacy stands the test of time? Join us on this episode of the Legacy Wealth Code Podcast as we break down essential risk mitigation and asset protection strategies for real estate investing. As experienced investors and professionals in the field, we share invaluable insights on entity structuring, lending requirements, and the pros and cons of various types of entities.

Dive into our conversation on the different options for safeguarding your investments, including LLCs, Corporations, and Trusts. Learn how to determine which entity best suits your needs and how to avoid potential pitfalls when transferring properties between entities. We also tackle real estate contracts and partnerships, shedding light on operating agreements, bylaws, voting authority, distributions, and what happens if a partner passes away.

Finally, we reveal the secrets for maximizing protection in real estate, from the importance of insurance and umbrella policies to the value of attorney-drafted custom contracts for complex deals. Don't miss your chance to build a legacy that lasts through wise and protected real estate investing on this compelling episode of the Legacy Wealth Code Podcast!

Onward!

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Transcript

Andrew Hoek
Host
00:01
This is the Legacy Wealth Code Podcast helping you build long-term wealth and a lasting legacy to real estate investing, tax strategies and motivational stories from some of the most successful and influential people out there. Here are your hosts Real Estate Investor and Entrepreneur Michael Knotbaum, and Real Estate Investor and Attorney Andrew Hook. 

Michael Notbohm
Host
00:22
Hey guys, Welcome to another episode of the Legacy Wealth Code Podcast. This is Michael Notbohm. I'm here with my partner in crime, Andrew. 

Speaker 3
Host
00:29
What's going on? 

Michael Notbohm
Host
00:30
So we are today going to talk about one of the most exciting topics that's out there maximizing protection and mitigating risk. If that doesn't get you going, i don't know what to tell you. 

Speaker 3
Host
00:43
Who needs coffee when they're listening to this right, right exactly. 

Michael Notbohm
Host
00:47
So, all jokes aside, it is something that is extremely important. As you start to build a portfolio of investments, as you start to build the legacy piece of your wealth, the last thing you want to do is put in all this time and effort building it and then end up losing it because you're not protecting yourself. I'm lucky enough to have you as a partner. Andrew, who is also a real estate attorney, keeps me out of the clink. We always laugh about that, but it really is something I think over the last five or six years, we've really made a priority. 

Speaker 3
Host
01:20
Yeah, I think that's accurate. I agree with everything you just said there. It's not the most sexy topic. it's almost like creating your will. Who wants to think about themselves dying? but it's something that's necessary for you to do, because what you leave people is such a mess. You don't want to leave yourself in a mess. It's no secret to really build up a portfolio and to put yourself in a position where you've spent potentially years acquiring these things. The last thing in the world is you want to have some stupid mistake botched it all. 

Michael Notbohm
Host
01:56
Unfortunately, there's people out there that literally just try to find people that they can take advantage of. 

Speaker 3
Host
02:05
We use the word professional tenants sometimes that their whole gig is basically to make it as difficult as they can for a landlord. Unfortunately, we see that Those are unfortunately the ones that are going to bring frivolous claims potentially and really going to test what you have as far as the settlement structure In some states. 

Michael Notbohm
Host
02:26
It varies, obviously, state to state, but some are extremely lenient about those frivolous claims and some of them are a little bit. I guess they make it more difficult for people to do it, but Florida is probably fairly easy. 

Speaker 3
Host
02:42
Yeah, that's a big part of why we saw such a push, one of the reasons. but especially with when all the COVID stuff hit and you had basically rental protections for tenants that went in some cases years, i had a mass influx of new landlords from the out of state that just said we're so tired of dealing with rental laws in states where we can't even maneuver or conduct our business because we just have no rights as a landlord. 

Michael Notbohm
Host
03:16
Yeah, that's definitely crazy. All right, so let's jump in first topic here entity structuring. What would you give as advice to investors, whether they're brand new or seasoned, in terms of things to consider when they're setting up an entity, when they're purchasing properties? What kind of entity would you say is best and maybe give a couple of pros and cons? 

Speaker 3
Host
03:37
Where I usually start with people is. I'll ask them the question are you financing an acquisition or are you paying cash? Because if you're financing an acquisition, you got to have a discussion with your lender, especially if you're using a conventional loan. Maybe you're using a conventional investment, something like that, but a lot of times the lender is going to have guidelines or requirements on how they'll allow you to close or what they'll lend to, and so in some circumstances they'll only lend to you as an individual, and so that really limits your capability of what you can do, and in those scenarios you're talking about having to retitle something on the back end. Others are pretty comfortable with LLCs, especially if you're doing some form of commercial or investment loan. 

Michael Notbohm
Host
04:18
All right. 

Speaker 3
Host
04:18
That's. You know. The LLC tends to be my favorite just because it's simplistic, it's well understood. Insurance companies do okay with it, banks do okay with it. The other option is trust. 

04:30
A lot of people like the idea, in particular in states that allow land trusts, where you can have really good anonymity. They're great for an anonymity perspective, but they're not good from a liability perspective or protecting from creditor perspective. So you know, and what I see with trust sometimes is that lenders are less comfortable with them, they don't understand them as well, and insurance companies a lot of them don't even write policies for land trusts. So there's some things that you need to figure out and navigate and pitfalls there, but typically you may have somethingyi like good anonymity. 

05:05
As I said, i start with you know what are you. Do you have any restriction on what you can do? Well, if you don't have any restriction on what you can do, then you know you run through basically that scenario that we just did. So does it make more sense to do an LLC? Does it make more sense to do a corporation Or does it make more sense to do a trust? And I think most people especially that are. You know, small to mid-sized investors tend to lean towards the LLC again just because of the fact that it's a simplistic format. It's well understood. They're easy to file, they're easy to upkeep and continue to have filed on a regular basis or an annual basis. 

Michael Notbohm
Host
05:45
Yeah, you just have your filing fee that the state gets for you just to say yes, all my information is still correct. Please send us $395. 

Speaker 3
Host
05:54
Well, remember when you were having that conversation at the last mastermind with the guy from Delaware And he said basically, like that's one of their number one revenue sources. Oh yeah, well, yeah, because everyone loves. 

Michael Notbohm
Host
06:04
Delaware Corporation. So tell me about you know, i think that it's always good to tell people. Okay, this is the pros and cons, this is what you should do, but sometimes it sinks in better if you have a horror story. 

Speaker 3
Host
06:14
Yeah, i think the main thing you're trying to avoid is personal liability, right? So the example I always give is that if you own a rental property and you have a tenant who severely injures himself, you know, let's say, the roof cave dain or something on the property, and that tenant is severely injured or dies, that lawsuit is coming against you individually if that property is held in your individual name. And so again, for the people that have, you know, acquired some wealth and they have personal assets, all that is now at risk because you have a creditor. And if you don't have that in some form of other entity that isolates yourself from personal liability, you're on the hook for that judgment, if you get a judgment, and that's you know. Of course talk about insurance here in a little bit, i'm sure, but like insurance mitigate some of that risk, but not all of it. 

07:04
The main thing you're trying to do is get outside the personal liability, and so you know horror stories I mean, i can't tell you how many people I will talk with that you know have a good number of properties that they're running out and they'll be wealthy. You know, a lot of times it's physicians, right. So they're high earners, they've worked for a number of years, they've built up their asset pool, they've done nothing to set themselves up from a liability protection structure and they own all these properties, you know, in an individual capacity, and all it takes is one bad event. 

Michael Notbohm
Host
07:42
So Well, and I think you brought up a good point, because if you know people follow in the Burr method, for example right, so you know you teach people. okay, but go buy a house and then remodel it, then refinance it, you know, and then pull the money out, go buy another house, and you're doing this typically in a personal name. A lot of times it might be somebody even starting with like an FHA loan. Sure, live there for six months. I mean, we had Ryan on a couple of weeks ago and that's what he teaches his clients. but you got to think that all those people are probably not setting themselves up by moving that into an LLC. 

Speaker 3
Host
08:16
Well, and you? there is a complexity there, right? Because the due on sale clauses that are in standard form mortgages say you're not supposed to transfer this property without paying off the mortgage, and so we get a lot of people who are very gun shy about that. They'll say well, you know, i closed five years ago and it's in my individual name and I don't want to run the risk of, you know, triggering the bank to foreclose or accelerate the loan. It's a valid concern. The express language in the mortgage says you know you're not to do this. It's a violation. Having said that, properties get transferred every single day, all the time. I've never seen a lender accelerate. I've never talked to anybody that is in our industry that has seen a lender accelerate for that sole reason, right? 

09:06
You know if you miss a payment or you don't, you know your insurance lapses. Those are the things they're really looking at and saying hey, you know, but if I'm going from my individual self to an LLC that I own, I mean, a lot of times you're not even getting taxed on that transfer because it's not considered. It isn't even considered a transfer for taxable purposes. So from the bank's perspective they're still dealing with the same person. It's just you're doing it through a corporate route now, or a company route now, versus an individual. 

Michael Notbohm
Host
09:38
Yeah, that makes sense All right, so let's talk a little bit about insurance. You know, obviously you have your standard homeowners and you know homeowners insurance, flood insurance if applicable As people are building a portfolio of investment properties. what other insurances are extremely important to carry? 

Speaker 3
Host
09:56
Sure, and as you said, I mean, i think baseline of course is you're gonna you wanna ensure that property from you know it burns down and you have some coverage there, of course, or you get a hurricane and you get a flood and you've got that. Those are kind of the baseline. Have those on each property. As you start to acquire more, your structure is probably gonna start to change somewhat. From a standpoint of a lot of times, people start to operate in a capacity where they'll have holding companies and then they'll have operating companies, and a good tool for that, i think, is that once you have an operating company, you really should have a liability policy that is for the benefit of the operating company, because the operating company is ultimately gonna hold title or ownership I shouldn't say title they'll hold ownership of the holding companies. So you know, for example, our operating company, we carry a general liability policy that protects us across any claim on any property that we have. You can layer that further by then getting individual GL or general liability policies on those individual properties as well as part of, you know, the specific property insurance. But I think in no brainer if you're gonna start on the operating company side is, you know, get the GL policy for the company itself and maintain that. 

11:18
The other thing too, and this is one of those that every once in a while I'll run into. I'll talk to somebody and they'll say man, i don't know why, but for me there's some slight nuance as to why I can't get it. Or it's more difficult for me to get Bye. Wealthy people tend to have umbrella policies as well, and the umbrella policy basically is there to say, if there's a shortage on any of your other policies, the umbrella policy kicks in as additional coverage And so, absolute worst case scenario, you have something happen on a rental property, you can always turn it over to your umbrella policy as well if just in the event that it was ever needed. And they all range, but like they're tend to be fairly cost effective for what they are. I mean like a million dollars in coverage on umbrella policy. It's probably several hundred dollars a year. 

12:08
So I mean they're not prohibitive and they're a really great extra resource or tool to have. 

Michael Notbohm
Host
12:15
And that's where you know, i know we talk a lot about putting the team together, right? So you know, you've got your tax guy, you've got your relationship with a realtor, you got your lenders. It's extremely important, i think, to still have that insurance component too. 

Speaker 3
Host
12:31
Yeah, you know, and that's something. It's funny. You say that because I literally did a call. I sent an email to one of the insurance people that we use and I said I wanna do a pulse check And when I met by that, as I said, i wanna run through everything that we have policy-wise with you to make sure that we're not missing something somewhere. But you're right, i mean it gets tough And like, especially if you're running businesses and you've got assets, i mean like unfortunately I'm in a position where I have like three different insurance providers. 

13:03
I'm like which one's holding that policy? In a perfect world you can buy them all, but they're not all. Some of them are getting big enough. I should say I should probably should dial that back a little bit because some of them are getting big enough where they can cover all those things. But a lot of times you kind of have one person that specializes in sort of one area, like a business insurance. Somebody else is better at doing like property, that type of thing And so, or personal, like if you're just your vehicles, your boats or whatever, and so you start to segment out a little bit. But if you can get that under one umbrella of one person, that's huge. 

Michael Notbohm
Host
13:34
Yeah, well, when you think about I mean obviously having those relationships, you look at what we went through with the St Pete House just trying to figure out. You know Florida for those listeners that aren't familiar with the crisis that we have here is insurance in Florida is really difficult to get. I mean, you've got these major carriers who are saying I'm not really interested in writing policies in Florida because you have a hurricane. Ian comes through and it's what are they estimating like $50, $60 billion of damage, maybe even more than that? 

Speaker 3
Host
14:03
I wouldn't be surprised. I saw the Bergstrom catalog came out yesterday. I got it and I was reading it last night. That's the University of Florida master's master's in real estate is named after that program. But anyways, they put out a publication in the fall and in the spring and they were talking about how, on Fort Myers Beach from Hurricane Ian, 97% of the properties on Fort Myers Beach have made some form of claim on a damaged policy. I mean, that's nuts, that's insane. 

Michael Notbohm
Host
14:36
Yeah, and the sad thing is that's the people that had insurance. Yeah, you know, there's a ton of people down there that had their home paid off and they just didn't carry anything Sure. And you know they're just talking about a total disaster. 

Speaker 3
Host
14:50
You know, going back to the beach house for a second and the other thing I think that's important to think about there too. 

14:55
and you know, from the standpoint of like I think in some novices will look at insurance and say, well, i have my person, i'm comfortable with them, i have a relationship, they all provide the same thing, right. But in some instances I think that's true. But it also, i think, is important to realize that, like, some of these insurance companies have gotten so big where they have so many different carriers that they really do have different options for you. And the example that I think really drives that home better than anything is the flood policy that we had on that property where the initial quotes that we were getting were $18,000 a year for flood insurance coverage. We shopped that with a provider we use who has a tremendous number of carriers, and they were able to get a policy on a localized level for $4,000 a year. Right, that savings is astronomical when you think about that, especially if you're gonna extrapolate that over the years, if you're holding that. 

Michael Notbohm
Host
15:55
No, no question about that, and I think part of it is that that local policy, they understand the area Sure. So the big carrier, they're just typing it into a computer and it's gonna give that a risk analysis. I always think of that along came Polly movie where he's comparing whether or not he should date. 

Speaker 3
Host
16:10
Jennifer Aniston. The answer is always yes. 

Michael Notbohm
Host
16:14
Yeah, I guess it was Jennifer Aniston. You can't really go wrong with that one, All right. so let's move into some of the different agreements and contracts. This is always important because everyone's happy when things are going well. There's never any issues when everyone's. you buy a property, you put some work into it and now it's worth double the money and you got a 20 cap on the rent. No question, no one's mad. But when things go wrong, what do you do? So you and I have a partnership agreement, So let's touch on that, how important that is and what people should consider putting in their partnership agreement. 

Speaker 3
Host
16:48
Yeah. So that's a very important piece of running a company and, you know, a lot of times we'll see people and they'll say well, i, you know, i have a company and I have a partner and we filed it and we have our articles of it, or the corporation, or articles of organization, depending on how you're structured, and that's what we have. Well, that's fine, but it doesn't tell us anything specifically as to how that corporation or that company is run, how it's governed, who has signing authority, who has voting authority, how are distributions made? If you don't have those, you basically default into whatever statutes out there for the corporation or the or the LLC, and those by nature tend to be somewhat vague because they're trying to give people enough to go off of but also have ability to make more nuanced selections for how they run their own company. And so in the LLC capacity, you're going to have an operating agreement and a corporation you're going to have bylaws, but basically they break down to the same thing. As far as what are they intended to actually do? 

18:00
The main thing that I think really needs to go into those well, there's a bunch of them, but the kind of high points are, you know how, how our matters voted on. You know, do you have a tiebreaker vote, for example, like if there's just two of us in a company and you own it 50-50, what happens if we disagree? You know, sometimes we spell out things like tiebreaker votes. You know, how are distributions made? when are distributions made? I mean, you know, one of the things that we talk about with people a lot of times is what type of minimum capital do you want to retain before distributions are made? So you know you may have one person who's overly cautious and says you know, i want to make sure that we have six figures in an accompanying account at all times. You may have somebody else that says you know they don't care, they don't want anything, they want everything coming out all the time. So you know, balancing that stuff out and knowing what, you know what's the figure that has to basically remain in before distributions made and that type of stuff. Those are important. 

18:58
What happens if somebody dies? Those are Who's going to say that's a big one, huge. I mean I can't tell you how many times I've seen where you know somebody unfortunately passes away and now their family's involved and you have a business partner That can be really challenging to do business with somebody's family members. I mean it's you know, replacing your partner with their spouse or whoever it is standing behind them is a very different scenario than what you're used to, right, and a lot of times there's not the same amount of knowledge or anything else, and so you know what happens in the event of death are very important. You know if you have an ultimate dispute that you can't settle. You know a lot of times those are really important things to have in there too. 

19:40
As far as what happens if we hit a stalemate and I don't feel like you're doing what you need to be doing, or vice versa, you know how do we solve that, how do we go about getting somewhere, so that you know hopefully you're not sitting in court litigating that for the next couple of years, you know, right. 

19:57
So those are all kind of important things I think are spelled out in there, and definitely you know. The other one too, just from a probably more of a practical perspective, is like if you're closing on properties and you're getting loans and you're dealing with title companies all the time, you know you're dealing with title companies all the time. That's a pretty common ask Like give us your operating agreement or bylaws, because they want to see hey, you made this application for a loan or you're going to try to sell this property. Do you actually have authority to do it? I mean, that's kind of 101, right. And then also, do you have signing authority? because is it you signing documents or am I signing documents? Is it both of us signing documents? You know, those are all kind of things that are really important to be spelled out and have it for a good, cohesive system. 

Michael Notbohm
Host
20:36
Well, i've heard the horror stories before where people are going through a divorce and they have, like, their mistress come in and pretend to be their wife. I mean, there's crazy stuff that happens And that's obviously more on just the standard residential side. But I'm sure same type of thing business dealings, there's business divorces, and is the person trying to liquidate these properties actually have the authority to do so? All right, so let's talk about some contracts real quick. I know we had you know you and I were chatting offline before the podcast, but in Florida, and probably similar in most states, you've got a typically like a purchase contract. There's an as is contract And then there's a secondary contract that some people use that will have allowances for repairs. Most of the time I think I see in Florida the as is contract And you know, i think you'd probably agree with that at the title company. So when would you use that? When would you use, maybe, a contract that you have a lawyer draw up for you specifically, and why would you do that? 

Speaker 3
Host
21:38
I tend to think that the standard form contracts are pretty good for most vanilla transactions. So they are writ. In Florida, at least, there's a joint committee that is made up of real estate attorneys and realtors and they come together to draft and then make edits to the contract that you know become necessary from an industry perspective, and so the standard form as is or a parallelance contract on the residential side fits that bill. There's a standard form commercial contract on the commercial side, there's a vacant land contract. You know, if you're doing what I would call a fairly vanilla transaction, i think those are very appropriate to utilize. I mean, it's something that you know in most cases can work for what you need to do. 

22:27
There are circumstances where I think it becomes more important to be able to have a different contract, and so you know, one of the examples you and I were talking about earlier, mike, was wholesaling. 

22:39
Like, if you're going to wholesale property, you don't want to do that on a standard form contract. You want to be doing that on basically a wholesale contract that's allowing you to assign it. There's probably there's probably more disclosures that are necessary, again, depending on what state you're in. The other thing, too is, like you know, occasionally we'll get a contract where it's like real estate and the business for example, if it's a commercial closing and like the standard form commercial real estate contract is really only touches on a part of that. It doesn't touch on the real estate and the business is just doing the real estate. 

23:11
And so I did one not too long ago that was a bulk purchase of condominiums. There's really not a good standard form contract for that, of course, either. So I mean circumstances come up where it becomes necessary to have an attorney drafted contract and I usually say you know, if there's anything weird in it, that's going to take more than probably a couple lines in the additional terms to spell out what's going on. Probably want to have that on a lawyer prepared contract at that point. 

Michael Notbohm
Host
23:36
Yeah, that makes sense. So the other thing that I want to touch on because this is something that I see quite a bit, both in the stuff that you and I are buying together and then also working with some of my investor clients is that the lack of disclosure, i think, is something that well, let me put it this way people that refire, remodel the house and they use the non occupancy sellers disclosure Right, so they go through and they're they, you know, got it and then they just say, well, i never lived here, so I don't, i can't warranty anything. What do you? what would you say in terms of protection? because you know, i've got a unfortunate lawsuit right now going with one of my clients that bought a house that clearly there was a fire and, unfortunately, though, the previous owner did not disclose it, and then, on the seller's disclosure, they just said, sorry, it's non occupancy, the seller has no knowledge. Well, obviously you know there was a fire. 

Speaker 3
Host
24:33
So I mean, that's a. That's one of those really tough balances to strike right and I, depending on the hat that we're wearing and who we're representing, i have a different opinion on it. So the standard form disclosures that most agents are used to especially on a residential side, because commercial is much more buyer beware are not required to be provided. So they're really there as a tool, i think to, to protect the broker, and the broker is more than they are anything else. 

25:07
The problem that you run into them with is that sellers will sometimes sometimes it's intentional, but I think more often than not it's unknowingly will make a representation that they don't realize is factually incorrect. And what that does is if you've given that disclosure that says you know properties on septic, for example, or it's on sorry, it's on sewer, not on septic and they check that box, well now if I find out that the property is not on sewer and it's on septic and I'm the buyer and I come to you, i've got a slam dunk case. Say you made a material false representation to me. That may not have been intentional and they may have just been moving too fast through the form or not understood exactly what the question was. But now they've got a lawsuit on their hands that they're going to have a problem with, and so you know, when I represent sellers, i'm always very cautious. 

26:04
But do you really want to do this? I mean, yes, you have an obligation to disclose things that you know about that are materially impact the value of the property. That's borderline, no matter what. 

26:18
You have to disclose that, whether you're giving a written disclosure or not, whether you fill it out or not, But a lot of times you may not know something and if you just guess on that form, you're putting yourself in harms way. On the flip side, i mean, if you're representing a buyer, i think you always would like to have a written disclosure if you can. But if you can't, at the end of the day inspection and due diligence is the best thing you can do. And I mean that's something that I talk to home inspectors about all the time and they're like they wear a little bit of a challenging hat in the sense of like if they're overkill they get a reputation for killing deals. They'll never get work from people right And so. 

27:04
But if they're too loose and now somebody gets stuck with some huge problem, i mean that's bad for them too. I mean they've got a lawsuit on their hands probably at that point too, and so they're in a little bit of a tough spot as far as where do they really come down on things? But I think if you're the buyer, you really want somebody who's gonna pick that apart with a fine tooth comb and check out everything. And just because the crawl space under a house, for example, might be a little tight, we'll get in there and look at it anyways, that type of thing So-. 

Michael Notbohm
Host
27:40
Well, i think it kind of is the global theme of what we're talking about today, which is maximizing protection. If you're the seller, even if we never lived in the property, disclose as much as whatever we do know, cause the last thing you wanna do is have to deal with the lawsuit on the backend. It's a property you sold a year ago. You're not thinking of it anymore, you've moved that money into another property and all of a sudden you get a knock on your door and the process server's there. 

Speaker 3
Host
28:08
Yeah, and I think in most cases over disclosures. if you're gonna make disclosures, over disclosures is better than under disclosure, for sure. But I think in most cases you can explain away those things fairly well to the correct buyer anyways. I mean, if anyways, own property, they realize things happen, were they corrected or were they fixed? Is it no longer an ongoing issue? Fine, who cares? at that point. 

Michael Notbohm
Host
28:38
Well, it's when people are trying to cover it up, which unfortunately does happen. Again, that goes to having the right home inspector there. You don't want them killing your deals. but at the same time, when we're buying a property, we definitely want somebody to look at it and say this is a zombie, don't buy it. Or yeah, it looks pretty good. 

Speaker 3
Host
28:57
Like that one that we bought, where the inspector says the worst house has ever looked at Ever Anyway, right. 

Michael Notbohm
Host
29:03
That's the first house I've ever heard of that was bought from a Sears catalog. Yep, i mean, it's kind of crazy to think that that was a thing back in the day. You know, oh, i'm gonna take this one Page seven. I'll take white with the tan carpet. 

Speaker 3
Host
29:18
Yeah, think about who was putting those together too. Oh, i know, well, obviously we know who was. 

Michael Notbohm
Host
29:22
And I don't think that might have been their first day when they put that house together. 

Speaker 3
Host
29:25
I got my toolkit in the garage. I think we're good to go, Yeah exactly. 

Michael Notbohm
Host
29:29
They bought their toolkit on page four of the Sears catalog to assemble it. So all right. Well, i think we covered some good stuff today, so you know. essentially, i think the global theme is, if you're gonna buy real estate and start accumulating a portfolio, make sure it's in the right entity. structuring Typically in LLC is the easiest and most common, but there's some land trust that you could do. Insurance is it's not just homeowners. 

29:54
It's gonna be. You know your general liability And I think the umbrella thing was a great point because it is extremely inexpensive considering the protection that it gives you on the other side, and insurance always gets that bad rap right Cause it's like the necessary evil. Oh yeah, you pay and pay and pay and then you finally need something. It's like pulling teeth to try to get it, but you gotta have it. 

Speaker 3
Host
30:14
Yeah Well, especially if you're financing stuff. I mean there's no way around it in that scenario. 

Michael Notbohm
Host
30:20
Yeah, and then finally, when you're you know you're kind of getting the ball rolling If you've got a partnership, make sure you have a partnership agreement, operating agreement you know it may be called a bylaws, depending on the structure of your entity And then the contracts just make sure you're using the right kind of contracts for the deals that you're doing. The standard contract is typically gonna be fine, but for the most part, you know, if you start getting into the more complex stuff, then you're gonna wanna do, you know, come in, pay Andrew a little bit of money and have him write you up a real contract right, i think that's a good recap. 

Speaker 3
Host
30:51
Yeah, perfect. 

Michael Notbohm
Host
30:52
All right, guys. Well, until next time. This is the Legacy Wealth Code podcast, and we'll catch you on the next one. 

Speaker 3
Host
30:58
All right, take care. 

Andrew Hoek
Host
30:59
Thank you for joining us for another episode of the Legacy Wealth Code podcast. If you enjoyed this episode, click subscribe now and never miss an episode Until next time onward.