Many people invest in residential assisted living (RAL) real estate or other forms of real estate but do not protect their assets and investments. This makes them liable to lawsuits by third parties or vendors, or unfilled obligations such as uncompleted building works or renovation.
After you have poured much money, time, and effort into investing in real estate, you want your investments to pay off and for you to reap the gains, rather than your investment being the cause of legal or financial problems. This is why it’s important to review your real estate asset protection options.
Residential assisted living is poised to grow and become more popular amongst investors due to the constantly high demand poised by aging demographics and longer life expectancies. Residential assisted living facilities provide less than a traditional nursing home but offer more independence to their residents.
They require minimal staff and provide limited nursing time for each resident. Residential assisted living would therefore be a great addition to your real estate investment portfolio. Here are some of the ways you can protect your RAL real estate investment.
Insurance
Insurance is one of the most popular and common real estate asset protection strategies. But be wary of relying solely on insurance to protect you. Just take a look at your insurance policy and you will notice there are pages and pages of what is not covered and only a small portion of what is actually covered. Many common items such as mold, mildew, lead paint, asbestos, and other items even from past owners could find you personally liable if you simply rely on insurance.
If you have invested in RAL real estate, you may also wish to consider obtaining general or professional liability insurance as it helps to cover various possible liabilities that occur with the residential assisted living facility.
For example, the staff at the residential assisted living facility may be sued by residents for damages or lack of proper care. You may also consider landlord insurance depending on your residential assisted living facility.
Because you are investing in a healthcare real estate facility, you should be careful as healthcare can lead to increased liability issues due to unique patient care needs. It would be wise to engage an insurance professional to decide what are the various insurance types available for your real estate investment, their exposure, and their features.
Debt
Debt is another affordable real estate asset protection method used to protect your RAL investment. This ensures that your RAL real estate property has low or insignificant equity and may discourage creditors from coming after your investment property.
You can leverage and take advantage of debt in your real estate investment by constantly pulling out all equity in your investment. You can then reinvest the money in other projects such as the building of better facilities for the residents, upskilling, and training of nurses and staff at the RAL facility.
Legal Structures
Using legal structures such as LLCs, Corporations, Limited Partnerships, and Trusts in combination with insurance can provide very strong liability and real estate asset protection. Most states recognize the court history and case law that comes with using legal structures. Each state will vary as to the effectiveness of LLCs, Limited Partnerships, or Corporations and you should carefully consider the consequences before transferring assets.
Consult Professionals
When you want to protect your RAL real estate investment or other investments in general, it is best to stay updated on current federal, state, and local regulations. You should also avoid risky scenarios by consulting the relevant advisors and accredited professionals when engaging in deals and signing contracts.
For example, when investing in RAL real estate investment, there are numerous tax, legal, and healthcare issues to consider before investing. They may also vary based on the various state, federal, and local regulations. It is thus best to seek help and consult professionals such as tax and legal advisors if you want to protect your investments.
