Should I pay for a legal consultation?

Question

Hello BP forums,

I've been looking for some advice on the optimal legal entity structure for the real estate business I intend to build over the next 5 years, and I've come across a few firms that charge for a consultation.  Do you think I should pay for one, or could anyone recommend a good firm they've worked with before that offers the first consultation for free?  Thanks in advance!

Jonathan Klemm · Answer

@Seyi A. - This may just be me, but I would focus on taking action on your plan and less on the legal aspects.  For a while I was very worried about starting an LLC  and taking advantage of all the tax benefits and finally I realized if I just got started some of that other stuff would fall into place.  It's kind of like the "cart before horse" saying!  Either way get out there and kill it!!

Best of luck!

Renay Reese · Answer

never skimp on inspections, legal services or comfortable shoes. Always Always consult a lawyer (that you pay for) in your area for updated laws etc. it should be a business expense. Find a large real estate business in your area that you hope to reach there success and find out witch firm they use, through social post or their pr dept. hope this helps and good luck on your business venture it takes guts to go out your own and always make sure you have the best team starting with legal.

Angelica M Garzon · Answer

Hey Seyi,

I recommend that you choose an attorney with a great record and results, if that means a consultation fee then so be it.

To optimize my cash I usually stick to one attorney over time to handle all of my transactions. I also make sure the consultation fee can go towards the final bill amount as a credit. Lastly, I suggest you have the questions you want to ask ready and the information you want them to provide in a list of some sort, in my city attorneys charge between $300-400 dollars per hour so I try to not waste any time!

Good Luck!

Erika Carter · Answer

You definitely need to speak to a great attorney, face to face, to put you on the right path!

Stanley Bronstein · Answer

@Seyi A. Pay for the consultation and ask if they will apply the price of the consultation against any fees you incur for having them set things up for you.

Seyi A. · Answer

@Jonathan Klemm sage advice, thank you!

Seyi A. · Answer

Thanks all for the feedback.  Any recommendations for which firm(s) to approach for a consultation?

Seyi A. · Answer

I suppose I could also just post what I'm thinking here...

The full scope of activities the business will engage in (across multiple states) are as follows:

• Putting together and managing syndicated commercial (5+ unit) multi-family deals as a/the general partner
• Opportunistic fix and flips of single family and 2-4 unit multi-family residential buildings
• Tax lien investing
• Buy, reheb, and hold long-term rentals

The business will be operated out of Chicago, IL and I will initially be the sole employee.  Based on the research I have done to date, I believe the optimal initial entity structure for these activities would be as follows:

• OpCo: A single-member IL LLC taxed as an S-Corp with a Qualified Retirement Plan/Solo-401k that will be funded by rolling over existing retirement accounts.  The QRP would then purchase membership interest in this business and the FundingCo (see below).  This entity will be the main operating company, and will be party to contracts with 3rd parties (consultants, property managers, etc), and hire employees.  This entity would also be the/a general partner in syndicated deals.
• HoldCo: A WY manager-managed LLC with initial nominee manager (for anonymity), disregarded for tax purposes.  This entity will hold the interest to all assets that are intended to be held long term.
• FundingCo: A WY manager-managed LLC with initial nominee manager (for anonymity).  This entity is for raising 3rd party capital, though I am not sure whether it should be a disregarded or elect C-Corp designation for tax purposes.  I would like the ability to raise capital from international investors, so perhaps it should be taxed as a C-Corp.  Funds raised by this entity will be used to fund asset purchases via loans to either the OpCo (for fix and flips, etc) or the entity that takes title to the buy-and-hold assets.  Loans to be repaid either through refinance or asset sale.
• Assets; Assets to be held in land/grantor trusts wrapped by LLCs (disregarded for tax purposes) with interest attributable to my equity held by the WY HoldCo.

I know this may seem a tad "much" for someone just starting out, but I'm a details kinda guy and I like to figure out where I would like to be long term and work backwards from that.  With all this in mind, what do you think of the structure?  Any changes you would recommend?  Many thanks in advance.

Should I pay for a legal consultation?

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