Business formation advice - how to find a good lawyer?

Greebo

Greebo

N9017H - C172M (1976)
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Retired Evil Overlord
The missus and I are looking to diversify income streams.

We are considering diversifying into Real Estate - the idea being to very patiently seek out good value sales of single family homes, convert them to residential apartments (4 units or less), and then rent them out, and eventually do the same for smaller RSFs renting them out as a whole.

Now, please spare the cautionary tales. I know there are people who've lost their shirts in real estate, that tenants can be a nightmare, etc, etc. This isn't something we're rushing into, and we are doing a LOT of research before we even spend a dime.

So what we're looking for, up front, is a good lawyer who's knowledgeable in real estate, property/tenant, corporate formation, and of course, tax advice. We want to establish a long term relationship with an attorney to help prepare leases, and anything else that comes along, as well.

Internet searching has been somewhat fruitless.

Now, one person I know (who's not a lawyer) has said that what we're looking for is pretty basic law, so any lawyer should be able to help us. This person suggested finding a younger lawyer who's looking to build his/her client base because pretty much any lawyer can do the things we need them to do.

My wife, on the other hand, thinks we should find someone who's a real pro at this, and maybe even specializes in real estate law. Problem is, I can't FIND any who do...and my preferred real estate agent even asked her own lawyers and they don't want any more clients in that arena.

So - questions:
1) Do I need an expert, or is what we want so basic any half decent lawyer can do what we need? (Meaning should we be willing to find a younger attorney who's good, but still new enough to be cheaper?)
2) How do I go about finding an attorney with the practice area specialties I need? Internet searches have been somewhat fruitless, and the phone book is just a wall of text.
3) SHould we be so concerned, at the start, with forming an LLC? Maybe we could just start as individuals then go LLC down the road, as we acquire more units?

Hmm - for that matter - do we have any residential landlords here?
 
1) Listen to your wife. Especially for the first deal.

2) You get what you pay for. And, in the case of real estate, you may not even find out what the attorney missed until it comes time to sell. Get someone with expertise in real estate (see #1).

3) Doing incorporations is easy. A general practitioner can handle that.

4) One thing you missed is dealing with zoning issues, since converting a single-family to apartments is problematic and/or requires conditional use permits, special use permits, or even zoning changes in some jurisdictions. SO, you will ideally want not only a real estate attorney that makes bread-butter from house closings, you'll also want one with political saavy and connections.

5) I would suggest that you seek out and talk to a few others that do similar investing in the area. Ask for their thoughts on attorneys. And learn from what they tell you. I heard someone suggest that people thinking of getting into business pay to spend a day or two with folks doing this kind of investment.

6) Seek out real estate brokers that work with similar investors. Ask their recommendations.

7) Look at the zoning board presentations, and see who makes the presentations on behalf of the investors/real estate developers. Look up the firms, find attorney that specializes therein.

8) Once you're plugged into that stuff, get referrals on other professionals (accountants, tax, etc).

9) Join/attend professional associations in the same and related subject matter in your area. There really is a lot of smoke-filled backroom stuff that happens. It's about who you know.

and
10) check out the potential attorney through Martindale Hubble.
 
Chuck:

I echo Bill's advice above, subject to one exception: Martindale-Hubbell is one way of finding out about lawyers, but is by no means an authoritative source. It is a by-subscription directory which also provides a certain measure of "peer review" through its ratings. These ratings are of modest interest, but many lawyers- good ones- simply derive no value from subscribing to MarHub, and don't.

We used to, but our clients are referrals from other clients and (occasionally) other counsel; the entry in the big book was of modest value, but it costs thousands per year to be in it. We might again, but I probably won't like it.

Find someone who does what you need; the higher rates (by the hour) will usually be paid back by greater efficiency, and core knowledge.

Whatever you do, do not fall for the radio-ad incorporation services, and especially, for the sham of incorporating in some other state (usually, Nevada or Delaware) because you'll "save taxes." You won't.
 
Greebo said:
We are considering diversifying into Real Estate - the idea being to very patiently seek out good value sales of single family homes, convert them to residential apartments (4 units or less), and then rent them out, and eventually do the same for smaller RSFs renting them out as a whole.
Click to expand...

Just a wayward thought, the city of Port Huron is offering Financial assistance to people who will take thus converted houses and modify them back into a single family residence.:dunno:
 
Greebo said:
3) SHould we be so concerned, at the start, with forming an LLC? Maybe we could just start as individuals then go LLC down the road, as we acquire more units?
Click to expand...

FWIW, you may be subject to additional taxes if you do it down the road. Varies by state, of course.

Also, LLC isn't a slam-dunk... Talk to a good lawyer and a good accountant about what type of entity you want to be. When I started my business all my own research pointed towards an LLC but after a chat with the pros, I went with an S corp instead. Worked out better for us, and x, Inc. was just so much cooler than x, LLC. :yes:

Good luck!
 
Take my advice for what it's worth, being a newly-minted attorney in Michigan.

In getting to know many of our local attorneys through interviewing and networking, the best "value" seems to be in an associate who has been practicing in the area for 3-6 years. You don't pay the high per-hour charge of a partner (who will have the associate do much of the work in many cases anyway), and you are getting someone who is not "wet behind the ears" in the given area of practice.

Unfortunately, being in Michigan, I don't know anyone in your neck of the woods. I would follow the above-mentioned advice though and talk to those you know and trust locally to see if they have any suggestions (although it sounds like you may have already done that).
 
Chuck, Bill has given some good advice. I'd make a few alteration's however.

- The Act of incorporating is easy but thats not what you want. You want someone who can give you the correct form of entity to form, PC, LLC, LP,Inc. etc. It DOES make a difference. So don't just go get a General Practitioner to do this for you

- I have NEVER heard of an attorney who does not want more business. Did you speak with these attorneys or did your Realtor? With all due respect to realtors many do not like to involve attorneys in transactions because they see us as standing between them and their commissions. The attorneys sole job is to protect you.

- Martindale is ok as Spike said but not where I'd go to find an atty. Looking closer at Bill's post he says to check out the atty on Martindale not look for one there. That is a decent idea. If you go to martindale look for an attorney with a BV or and AV rating.

- This is not really a job for a young inexperienced attorney

- Let the attorney control the transaction NOT the realtor.

- Be VERY suspicious of any advice you get on this board from Attorneys especially those in Texas and Pennsylvania.:rolleyes:
 
You want to talk to as many small business people as you can find in your area, especially those in the real estate business. Find out what lawyers they use.

Consider joining the Chamber of Commerice for your area and asking there.

Also, and I'm not kidding, get your hair cut in the barbershop nearest the courthouse for your jurisdiction and ask the barbers which attorneys are well connected with the local judges. The best attorney in the world will do you little good if the local judges hate him.

Do the same thing for a good CPA, and whichever you find first ask him or her which lawyer/CPA they like to work with.

For my small business I actually use one of three local lawyers, depending on the nature of the problem. I have one general business/human resources guy, one tax attorney (we have a tax preparation business), and one bankruptcy/consumer law kind of guy.

The most important quality I value in an attorney is availability. If I have a question or concern, I want a lawyer who answers email and promptly returns phone calls. One who needs your business, not some kind of Law God who thinks he's doing clients a favor by deigning to talk to them.

Edited to add: After availablity I like lawyers who provide credible written billing statements, that track with my sense of what work they've done for me. Many lawyers just want big fistfuls of cash at sporadic intervals, based mostly on when their kids are going to the dentist. Avoid those.

I have found the best way to reduce legal costs is to have my lawyer involved at the first hint of trouble. The longer you try to DIY a potential legal problem the more it will cost you in the long run, and the less happy with the results you will be.
 
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Thanks to Adam going out of his way, I think we've found the attorney of our dreams, in this regard. He has 13 years experience doing real estate both personally and for clients. He started out in residential but eventually moved to commercial, and he knows the lay of the land.

We're meeting with him in the new year. :D

Thank you, Adam!
 
Guess I don't know your neck of the woods very well; it would be very difficult to turn single family into multi-family to rent 'round here except in areas that really need help (and you don't need to be renting there).

From the business perspective, I might add, find an attorney that is capable, but also that focuses on how to get things done (if it makes sense) rather than one that throws up obstacles and does not offer solutions. There are some attorneys I simply will not deal with; if I find a principal is hiding behind them rather that controlling them, I simply won't enter into the transaction. I'm sure Adam would lead you down this road.

Find someone that suits your personality, is responsive and reasonable to work with. Took me a long time to find one on the same wave-length.

Good luck!! Renting out property can be a challenge. Smaller properties are more owner intense as they are not big enough to hire a third party management company to professionally manage. OTOH, I had a partner in my old Baron that did quite well. Bought and rented duplexes in a great part of town and sold them for a very tidy profit a few years ago. Beware of friends and relatives that just need a place to stay for a short period of time <g>

Best,

Dave
 
No problem my friend you are more than welcome. Glad you liked the attorney. I have to say I have never heard anyone call me the attorney of their dreams. Have you Spike? Cjane does not count. Anyway glad you are happy with the attorney!:D
 
Consider as well, the overhead associated with the various legal business entities. I can say from personal experience that there is a lot of paperwork associated with corporate tax time, even for an S-Corp.

~ Christopher
 
Good on Adam...the best referral comes from another lawyer who you trust.
 
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TangoWhiskey said:
+1 for Adam! :) You gotta admit, Spike, that was funny, right there...
Click to expand...

I don't understand- all my clients feel that way about me, all the time! :D
 
Look all of them thar lawyers being smoked out of the woodwork. ;) ;)
 
lawingr said:
In getting to know many of our local attorneys through interviewing and networking, the best "value" seems to be in an associate who has been practicing in the area for 3-6 years. You don't pay the high per-hour charge of a partner (who will have the associate do much of the work in many cases anyway), and you are getting someone who is not "wet behind the ears" in the given area of practice.
Click to expand...
The best hybrid of this model is to be sure the partner/principal uses the cheaper associate for the majority of the work, but 'reviews' the work to ensure its accuracy/appropriateness/goals.
 
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