Legal Matters To Consider When Investing in Vacation Rentals
Welcome to another insightful episode with Eric.
While you can easily make a profit by investing a vacation rental property, there are legal matters to consider before diving in.
For this reason, today's guest is Tom Schmidt- an active Attorney, Entrepreneur, and Investor. Tom has been investing in and founding private companies for 17 years. In his law practice, he represents clients in investor, shareholder, and partnership disputes, so he has extensive experience looking at deals and the way they can go wrong.
Key takeaway in this episode is simplifying the legal matters in 3 categories:
- local regulatory and state government rules
- Liability risks
-And Corporate structure.
It is critically important to observe due diligence for the local regulatory and state government rules that may affect the vacation rental business. The investors need to ensure that they understand the rules and regulations before making investing to avoid legal hassles in the future.
Investing in a vacation rental property can be a tough choice to make. There are the pros and cons of property management, the responsibilities that come with this type of investment, and the legalities involved in owning a vacation rental.
The corporate structure is where you choose how your business will operate. The three major types of businesses are sole proprietorship, partnership, and corporation. In addition to these structures there are also limited liability companies (LLCs) which have benefits not offered by corporations or partnerships. Each of these entities offers different tax benefits and personal liability issues to owners.
It’s important to complete a thorough due diligence process before you sign on the dotted line. Otherwise, you risk buying a vacation rental that is going to create more headaches than dreams. So whether you’re looking to buy your first vacation rental or are just curious about the process, do not skip your due diligence.
Listen to the rest of the episode now.