Huntington Beach Shopping Centers

Here is a link to a Google Map of shopping centers in Huntington Beach, California.

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Top 50 Search Terms for Huntington Beach

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Why Come Real Estate Agents Do Not Make It?

The public perceives that real estate agents make a lot of money. They evaluate the fancy cars, clothes, and electronic devices (such as Supra Keys, PDA’s and Laptops) and equate this with high incomes. Of course much of this is necessary for image reasons to show that we are successful agents, as well as to effectively conduct our business. However statistics from the National Association of Realtors and the state associations show that the median income levels of agents are about $30,000. Not a very high paying job compared to other professions.

If they are doing it part time to supplement a spouses income this may be fine, however if they are the primary bread winner, it could be a monetary problem which drives them out of the profession.

First there are considerable expenses to get started in this field. Before you get a license you need to take educational courses, which can be $300 to $500. Then you need to pay for the state exam and if you pass it the state license fees. Add to that the training fees the Broker charges, the open house and for sale sign costs, mortgage and/or financial calculators, and initial marketing materials and you could be well into a $1000 to $2000 investment just to start.

Then there are the charges to belong to the National Association of Realtors, the state and local associations, and the regional MLS. These are over $600 a year in California.

Although some real estate agents work out of their Brokers office, most work from home offices for convenience. This necessitates the purchase of a desktop computer, a laptop for the field, usually a color laser printer, a fax machine, office furniture, and file cabinets. Even if they work in the Broker’s office they are usually only provided a desk and have to buy the office machines they need.

Next depending on the Broker are desk fees, franchise fees, E&O insurance, legal fees, and computer assistance fees. E&O insurance can be from $1000 to $2000 a year and fees can range up to over a $1000 a month. A good digital camera is also a must if you expect to do listings.

All in all, an investment of about $10,000 is required just to get started right. On top of this is an automobile lease in order to have an automobile that shows the right image for the agent and is comfortable for clients to ride in. This is a long-term commitment to about $500 a month.

Considering commission splits between agent and Broker, which vary, it may take a new agent at least two sales to break even. Where do these sales come from? Different brokers have different ways to generate leads for their agents, whether print advertising, Internet capture, or other means. Usually agents invest a lot of time on Internet follow-ups, up-desk calls and cold calling (restricted now by the do not call list). These yield very few active buyers. Some agents actually pay for buyer leads from Internet directory sites.

To get listings an agent must farm a certain territory. This involves offering perks such as magnetic calendars and mailers, which cost a handsome price from the printer and the United States Postal Service. Listings also entail expenses such as lock boxes (which cost over $100 apiece), signs, printing expenses for flyers, advertising, and some other miscellaneous items. Open houses are time consuming and take away the agent’s time for prospecting for new clients and personal family activities. Then there is no assurance that the house will sell within the listing period. If it expires, the total investment is lost.

There are some Brokers that reduce an agents initial expense, but the commission split is low to the agent and requires you to do a volume business to make a good income.

It all comes down to leads. Sales is a numbers game. Established agents who have been in the business for many years have an established base of past clients who may again be in the market or can pass on referrals. Once a business is established it can feed on itself. However these agents usually account for a small fraction of the agent pool.

New agents and those with less than ten years in the business need to find leads and convert as many as possible into sales to make a living. In a booming market this may be less of a problem as those prospects in the market are ready and willing to buy. They will usually make a decision fast so as not to loose out on a good opportunity.

However in normal and slow markets buyers can afford to wait and explore more numerous opportunities. This obviously means that the agent will spend a considerable amount of time with the buyer before a sale occurs.

For an agent to make a satisfactory living they must sell at least one property a month. To make a good living they must sell two or more homes a month. This is not easy when leads need to be developed from scratch.

Another source of leads are referrals from networking and real estate associations. Many agents become members of the Women’s Council of Realtors, the Council of Residential Specialists, and or obtain designations such as ABR or e-PRO so that they may obtain referrals from out of the area agents listed in the association’s referral directory. Membership has its expense as dues in each association are usually about $150 a year and monthly meetings can cost about $25. The larger expense of designations is the educational requirements such as four to five courses for a CRS designation at $300 each. Thus an outlay of $1500 or more for a designation is not uncommon. Of course this additional training usually makes the agent more qualified to better serve the customer. There is also another time commitment as each course is usually two full days.

So what usually happens, is that the agent does not achieve the desired number of sales and/or invests the time and money in listings only to see them cancelled or expired. Thus the income flow does not materialize. Many take on other part time or even full time jobs to supplement their income. Frustration usually sets in and obviously the other job takes away time to practice real estate properly.

Desperation also sets in, causing some agents to offer very low commissions on their side to get listings and financial incentives to obtain buyers. This reduces income from each sale so that the agent hardly makes any money after expenses. This is also an injustice to the clients as the agent usually tries to cut expenses such as advertising and also does not have the time to properly work for the sellers and buyers because of other part-time work responsibilities.

To further make matters worse, an agent in these circumstances will seek other cost reductions such as dropping memberships in associations such as the Women’s Council of Realtors. Many also will not pay their annual dues to belong to the National Association of Realtors, their local and state associations, and the regional MLS. Without the MLS they further handicap themselves by not being able to fully service their clients in a professional manner, since they do not have access to the non-public information on the MLS, cannot input listings in their own name, and do not have valid key access to lockboxes.
After experiencing a few years of 2 to 3 sales and experiencing a couple of expired listings, many will essentially fade away from real estate and concentrate on their other job in order to support themselves and their family. They essentially give up on the considerable time and monetary investment they made to be in this profession.

Claiming False Credentials Can Lead To License Loss

Regrettably, resume padding is fairly common. People have made false claims about their achievements, experience, and credentials in order to enhance political careers, or to gain better jobs and/or promotions. Generally it is not illegal. Usually it is an issue between employer and employee, and generally the consequences are dismissal or loss of status.
However, in California, real estate resume padding constitutes a violation of real estate law and can result in suspension or loss of license. This is a result of Assembly Bill 790, which passed both houses last summer and was signed into law by the Governor September 5, 2006.
The resume padding referred to here has to do with the designations and certifications that an agent may falsely claim to have earned.
There are several designations such as GRI, CRS, ABR, and e-PRO. In addition there are associations such as the California Association of Realtors and the local MLS, such as Southern California Multiple Service. There are seventeen designations available under the umbrella of the National Association of Realtors® . Do not confuse membership in an association with a desiganation. An agent might belong to the Council of Residential Specialists and not have the CRS designation. The same is true with REBAC. An agent might be a member but may not have earned the ABR designation. This is due to the time necessary to take the courses and meet the experience levels required. So an agent may claim to be a member of the association. It is only a violation when the agent uses the designation, when he has not earned it.
It should be acknowledged that most real estate designations represent focused, specialized training, resulting in particular knowledge and skills that do add value to the services an agent may provide his or her clients. Since ther is greater public awareness of the value of various designations, some agents falsely claim to have earned them.
Thus the legislation referred to earlier. The author of AB 790 stated, “With the enormous number of real estate licensees in the state of California, customers often narrow the market by searching for a broker with a specific expertise or training. In a highly competitive market, some licensees are misrepresenting themselves to consumers by claiming a certified private designation or trade organization membership that they do not hold in order to increase their business.”
Existing California law had already made it a violation to use the term Realtor® unless a person was actually a member of the National Association of Realtors. AB 790 has expanded that to include making false statementa or representationa concerning his or her designation or certification. Violation of this provision may result in suspension or loss of license.
How is the general public to know if they are dealing with an honest agent? The information is usually available on the associations websites.
To check on license status and years of experience in California go to the California Department of Real Estate site at http://www2.dre.ca.gov/PublicASP/pplinfo.asp
To check on membership with the California Association of Realtors and the right to use the term Realtor(R) go to http://www.car.org/index.php?id=MjgyOA==
To check on ABR designation go to http://www.rebac.net/MembershipDirectorySearch.aspx
To check on e-PRO status go to http://profile.epronar.com/index.php
These are just a few. A search on one of the major search engines should yield the associations website that you are looking for. A common problem are agents claiming to belong to the MLS when they do not in order to save the fees. Although the SoCalMLS does not have a roster that the public can access, members such as other Realtors or industry service providers can check the roster to see if an individual is a member.

IMPORTANT INFORMATION FOR CELL PHONE USERS

9 days from today, all cell phone numbers are being released to telemarketing companies and you will start to receive sales calls......YOU WILL BE CHARGED FOR THESE CALLS (available minutes will be consumed)

To prevent this, call the following number from your cell phone: 888-382-1222.It is the National DO NOT CALL list. It will only take a minute of your time. It blocks your number for five (5) years.

You must call from the cell phone number you want to have blocked. You cannot call from a different phone number.

This public service announcement is brought to you by Mike Stankewich, a Realtor, with ZipRealty, Inc. When you have real estate needs in Southwest Orange County, please contact Mike for assistance.

Gradual Rise Projected for Orange County Home Sales!

Before I get into the specific data, I wish to share some personal observations. Buyers are once again actively getting into the market and homes are beginning to sell. I am working with more buyers and showing more property this month than I did in the months from June to December of 2006. In fact one Buyer wanted to make an offer on a property, which we found out sold the previous evening. The market is once again becoming more competitive. Listings are still slow to sell, because of the built-up inventory. Thus sellers still have to be patient since they will stay on the market for a greater time. As always the sale of listings depends on the homes location, condition, and how agressively they are priced, as well as how well they are marketed. More and more buyers are using the internet, so listing agents need to take advantage of the marketing exposure that many of the internet sites offer.

After bottoming in the fourth quarter of 2006, existing-home sales are forecast to gradually rise through 2007 and into 2008, according to the latest forecast by the National Association of Realtors®.

NAR's chief economist, said annual totals for existing-home sales will be fairly comparable between 2006 and 2007. "We have to keep in mind that we were still in boom conditions during the first quarter of 2006 with a high sales volume and double-digit price appreciation," he said. "We're starting 2007 from a relatively low point, so even with a gradual improvement in sales it'll be pretty much of a wash in terms of annual totals. The good news is that the steady improvement in sales will support price appreciation moving forward."

Existing-home sales for 2006 are expected to come in at 6.50 million, the third highest on record, with a total of 6.42 million seen in 2007.

The 30-year fixed-rate mortgage will probably rise to 6.7 percent by the fourth quarter of 2007. Last week, Freddie Mac reported the 30-year fixed rate at 6.18 percent which is far below earlier consensus forecasts. The current interest rate environment and housing inventory levels present a window of opportunity for potential buyers.

The median existing-home price for all of 2006 is expected to rise 1.1 percent, and then gain 1.5 percent this year.

With all the wild projections by academics, Wall Street analysts and others in the media, it appears that much of the housing sector is experiencing a soft landing, Despite the doomsayers, household wealth will not evaporate and the economy will not go into a recession. If you're in it for the long haul, housing is a sound investment.

The unemployment rate is likely to average 4.8 percent this year, following a rate of 4.6 percent in 2006. Inflation, as measured by the Consumer Price Index, is expected to be 2.2 percent 2007, down from 3.2 percent last year, while growth in the U.S. gross domestic product is seen at 2.5 percent in 2007, compared with 3.3 percent last year. Inflation-adjusted disposable personal income should grow 3.4 percent this year, following a rise of 2.7 percent in 2006.

The Orange County real estate market has recently experienced rising home inventories and stabilizing prices. In this market, home buyers have increased negotiating power, but may be unsure of how to structure the best deal - they need a professional to help guide them through the transaction.

As the real estate market in Orange County became more balanced between buyers and sellers, home prices have stabilized. However, most homeowners can still realize a very good return on their investment. Consumers who bought their homes six years ago have seen more than 50 percent appreciation in their home's value during that time.

Every market's different, call a Realtor today!

These are my personal observations and views and do not represent the views of ZipRealty,Inc.

To discuss this further or for more information contact Mike Stankewich at (714) 697-0038 or toll free at 1-800-225-5947 ext. 8660 or e-mail me at Mike.Stankewich@ZipRealty.com.Visit our blog at http://blog.MikeStankewich.com to see related articles, archives, and to post your comments to this market conditions report.

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ZipRealty is a national full service brokerage with offices in the major U.S. metro areas. ZipRealty offers sellers full services, enhanced Internet marketing, and below market commissions, while maintaining the highest customer satisfaction rating in the real estate industry.

Buyers who use ZipRealty for their purchase receive a rebate of 20% of ZipRealty's commission, while receiving personalized service and complete client representation throughout the buying process.

Contact Mike Stankewich for your real estate needs. Visit http://MikeStankewich.com to search for all the properties on the MLS, to get pre-approved with E-LOAN, and for other valuable real estate and community information.

Top Websites for Huntington Beach, California

These are currently the top websites in Huntington Beach, California according to Alexa.

1. Huntington Surf and Sport www.hsssurf.com
2. Huntington Beach Conference and Visitors Bureau www.surfcityusa.com
3. Mike Stankewich - ZipRealty, Inc. www.Real-Estate-for-Orange-County.com
4. Electric Chair www.electricchair.com
5. Golden West College www.gwc.info
6. City of Huntington Beach www.ci.huntington-beach.ca.us
7. Premiere Bail Bonds www.premierebailbonds.com
8. Huntington Beach Public Library www.hbpl.org
9. Innovative Plastics, Inc. www.plasticfab.com
10. Holly Olson - RE/MAX Select One www.hollycampbell.com

These are currently the 10 top business and economy websites for Huntington Beach, California according to Alexa.

1. Huntington Surf and Sport www.hsssurf.com
2. Mike Stankewich - ZipRealty, Inc. www.Real-Estate-for-Orange-County.com
3. Electric Chair www.electricchair.com
4. Premiere Bail Bonds www.premierebailbonds.com
5. Innovative Plastics, Inc. www.plasticfab.com
6. Holly Olson - RE/MAX Select One www.hollycampbell.com
7. Orangesites.com www.orangesites.com
8. That Fish Shop www.thatfishshop.com
9. Websight www.websight.org
10. DeLillo Chevrolet www.delillo.com

These are currently the 10 top real estate websites for Huntington Beach, California according to Alexa.

1. Mike Stankewich - ZipRealty, Inc. www.Real-Estate-for-Orange-County.com
2. Holly Olson - RE/MAX Select One www.hollycampbell.com
3. Cindy Lay - Century 21 Beachside www.orangecountycoast.com
4. Paul Murphy - Star Real Estate www.huntington-beach-realestate.com
5. Sean Stanfield - First Team www.seanstanfield.com
6. Lazarus & Company Property Management www.lazarusandcompanyinc.com
7. Sukie Fee - SeaCliff Realty www.seacliffrealtyinc.com
8. Bob Bolen - Huntington Beach Realty www.huntingtonbeachrealty.com
9. Stephanie St. Pierre - Century 21 Beachside www.huntington-harbour-homes-for-sale.com
10. Keith Nichols - SellsOrangeCounty.com www.SellsOrangeCounty.com

Top 10 Real Estate Agents for Orange County, California

Here are the current top 10 real estate agents for Orange County, California according to Point2Homes.com

1. Namneet Dhaliwal

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Send Referral
Cell:
(714) 932-9409

2. Vickie Perez Fageol

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Phone:
619 337-1700 x236
Cell:
619 997-6291

3. John Guthrie

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Phone:
(520) 316-6773
Cell:
(480) 650-0585

4. Robert Little

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Phone:
909-355-3696
Cell:
909-561-1833

5. Liane Thomas

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Phone:
(951) 454-3805
Cell:
(951) 454-3805

6. Mark Taylor

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Phone:
(714) 368-8525
Cell:
(714) 206-9964

7. Mike Stankewich, Realtor, MBA, e-PRO

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Phone:
(800) 225-5947 x8660
Cell:
(714) 697-0038

8. Ann Downing

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Send Referral
Phone:
(951) 733-2486

9. James & Margret Hoppe

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Phone:
(949) 400-1072

10. Dino Alvarado

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Send Referral
Phone:
(951) 300-4660 x178
Cell:
(949) 922-2637

Another Record in Median Home Prices in Orange County, despite a Slow Market!

Housing prices have reached yet another record high in Orange County, with the median price rising to $646,000 in June, up $11,000 from May, according to data released by DataQuick Information Systems on July 19, 2006. This is an increase of 7% from a year ago. However sales were down 26.3% from a year ago, although they increased from May 2006.

Despite a cooling off and a reduction in the median home price in some US markets, there is no sign that the median price will fall in the Orange County's real estate market.
Be wary of those reporting declines of prices in some Orange County cities. The accuracy of statistics depends on the volume of data. For the county as a whole there is sufficicent data to support a trend. For individual cities the lack of sufficient data may result in abnomalities. The entry level market is stronger than the luxury home market, therefore if more entry homes sell in a particular city, the median price could be lower from a month ago. This is also true for Zip Codes within a city.

The issue is not demand but affordability. Demand is strong. In Anaheim the developer of the Platinum Triangle complex was intending to lease the 390 units of their first phase, however demand from buyers changed their mind. These will be sold as condos, starting at $300,000. There are 4000 people on the waiting list for the 390 units. I work with first time buyers on a regular basis and find that although they want to buy, often they can not qualify for the mortgage they would need to acquire a property that meets their needs, although lenders are working on inovative programs. For example CalHFA is offering a 40 year fixed rate loan at below market interest rates for first time buyers. Some lenders have introduced 50 year fixed loans. Several cities in Orange County offer incentives for first time buyers with moderate income levels. Huntington Beach is desirable for many reasons including the beaches, which means the prices will be higher. Thus sometimes I need to steer first time buyers to Buena Park, Cypress, or Stanton, so that they can afford what they are looking for.

The California affordability index is at an all time low, which means less than one person in six can afford the median priced home. This means that prices will stabilize near current levels, which is what we are beginning to experience. Appreciation increases will stay in the single digits, probably rising at the rate incomes rise. So the issue is not demand, but affordability. We have reached a plateau and this has created a stabilized real estate market in Orange County.

For the particular cities in my three market districts, the following are the new median home prices, based on June 2006 data. To compare these to May 2006 data see my previous report on Blog.MikeStankewich.com

HUNTINGTON BEACH DISTRICT
Huntington Beach
92646 - $700,000
92647 - $660,000
92648 - $896,500
92649 - $645,000
Sunset Beach – Insufficient Data
Surfside - Insufficient Data
Seal Beach - $909,500
Rossmoor – Insufficient Data
Fountain Valley - $732,000

NEWPORT BEACH DISTRICT
Costa Mesa
92626 - $725,000
92627 - $680,000
Newport Beach
92660 - $1,170,000
92661 - $3,500,000
92662 - Insufficient Data
92663 - $1,350,000
Newport Coast - $2,050,000
Corona del Mar - $1,729,500

GARDEN GROVE DISTRICT
Garden Grove
92840 - $590,000
92841 - $599,750
92843 - $544,500
92844 - $502,500
92845 - $606,000
Westminster - $620,000
Midway City - $582,500

The Orange County market has slowed down and normalized after three years of robust activity and double-digit appreciation. Housing sales, in terms of overall numbers, are down 26.3% from a year ago. This reflects that there are fewer buyers in the market, although I have found the ones in the market to be serious buyers. That means there are 74% of the buyers that were in the market last year. Many first time buyers are being priced out of the market. Housing inventory is up due to the lower sales volume, thus homes remain on the market longer before selling, mow about 50 days. Although a seller may have to wait longer to sell, the good news is that he can still get market value.

However a seller must be realistic in what the market value is. Many agents, in order to get a listing, will suggest a high price, and the property will sit in the market until the price is reduced. When price reductions start, the seller usually gets below market value in the end. These agents are usually those who offer discounted commissions and then offer selling agents below the market 2.5% to 3.0% rate. I am seeing listing agents offering 4% to the selling agent to induce a sale. While commissions are negotiable and buyer agents do not care what the listing agent makes, most buyer agents will shun showing properties at commissions below 2.5%. After all that is the way they make a living. With fewer showings the seller will usually have to accept a low-ball offer or wait a long time for a good offer. With double the available inventory and only 74% of the buyers from a year ago, only prime properties and those reasonably priced will sell in a reasonable time. Buyers have more choices. Buyers do have the ability to negotiate. This is especially true in higher value properties. Despite the trend to a buyer's market, we have a strong economy and real estate market that will support the value of existing properties.

Single-family homes stayed at a median price of about $700,000, according to data provided by DataQuick. Condominium median price was $456,500 for the same period.

There are numerous indicators that suggest a strong real estate market in Orange County. I will not go into all the details. Gary Watts, a noted real estate economist, provides a complete account of these factors. He predicts continued appreciation throughout 2006.

To see Gary Watts report visit http://Watts.MikeStankewich.com where you can download or print it.

The home buying season is here. If you are considering buying today is the best time. Inventory is good, so you have more choices to choose from. If you are considering selling now is the time to list your home to take advantage of the time most buyers are active from mid April through the end of summer.

To discuss this further or for more information contact Mike Stankewich at (714) 697-0038 or toll free at 1-800-225-5947 ext. 8660 or e-mail me at Mike.Stankewich@ZipRealty.com.

Visit our blog at blog.MikeStankewich.com
to see related articles, archives, and to post your comments to this market conditions report.

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ZipRealty is a national full service brokerage with offices in the major U.S. metro areas. ZipRealty offers sellers full services, enhanced Internet marketing, and below market commissions, while maintaining the highest customer satisfaction rating in the real estate industry.

Buyers who use ZipRealty for their purchase receive a rebate of 20% of ZipRealty's commission, while receiving personalized service and complete client representation throughout the buying process.

Contact Mike Stankewich for your real estate needs. Visit MikeStankewich.com to search for all the properties on the MLS, to get pre-approved with E-LOAN, and for other valuable real estate and community information.

Owning Real Estate for Investment

Owning real estate for investment, especially residential and commercial real estate is inherently risky. Accidents happen. People can get hurt on the property. When people are injured or killed on property that does not belong to them, the injured victims and family members of deceased victims frequently sue the property owner for damages.

Insurance is the first line of defense to protect against claims arising from the property, but judgments can exceed the amount of insurance coverage and sometimes insurance coverage is denied. For example, if you have a $2,000,000 general liability policy and an injured tenant obtains a judgment against you for $3,000,000, you have a $1,000,000 problem that could have been avoided if your property were owned by an LLC rather than by you in your name.

When your LLC holds title to real estate and the worst case scenario occurs and the court awards the multi-million dollar judgment in favor of the plaintiff, the defendant will be the LLC instead of you and the creditor should only be able to collect the judgment from the LLC's assets. Your assets should be protected. You may lose your entire investment in the property owned by the LLC, but the rest of your assets should be safe. The cost to form an limited liability company to hold title to your real estate is insignificant compared to the money and time most people invest in their real estate.

You do not want to put your primary residence into an LLC - no Homestead protection available and you lose tax deduction for primary residence. However, there are several benefits to putting your investment property into an LLC. The two biggest reasons are for TAX shelter, and for asset protection. Heres an example: When I have the contract on a property, I quit claim the property into my LLC. Why? When I sell it, the capital gains taxes hit my LLC, not me personally. That means if I profited $50K on a deal for the year, but all my combined expenses for everything under the LLC came to $45K, I only pay taxes on $5K. You can deduct the mortgage interest as a business expense if the rental property is in the LLC.

Neat little trick. That’s why I have a good CPA. Find one who specializes in creative real estate investing. Don’t forget to tell your buyer’s mortgage broker that it is a corporate sale. He/she needs to know this.

If you have real estate that is rental property, placing the ownership of the real estate into an LLC protects you personally from any liability that may arise out of accidents on the property. If the property is in an LLC and there is some kind of judgment for damages sustained by someone on the property, the person could only look to the assets of the LLC to collect its judgment. By having all of your assets in another LLC, you try to maintain those free of any claims of creditors other than the mortgages which have to be on the real estate.

If you own investment real estate in your name, rather than through an entity such as an limited liability company, corporation or limited partnership, all of your assets and life savings are at risk and could be lost to a creditor if a problem occurs with the property. The LLC is the entity of choice today for holding title to real estate, the corporation and the limited partnership are infrequently used to hold title to real estate.



Two Primary Asset Protection Rules for Real Estate Investment

Asset Protection Rule Number 1. Buy as much insurance as you can afford to insure all of your LLC's real estate and business activity. Make sure you have written proof of insurance showing that the LLC is a named insured. If you transfer real property to your LLC, but do not obtain insurance naming the LLC as an insured, the insurance company will probably deny coverage.

Asset Protection Rule Number 2. Form an LLC to hold title to your real estate so that if a lawsuit occurs, the LLC will be the defendant rather than you. This is the key to real estate asset protection. If you own the real estate, all of your assets are at risk. You must transfer title to the real estate to your LLC to reduce the risk you will be named as a defendant in litigation arising from the real estate.

Corollary to Asset Protection Rule Number 2. You have to actually sign a deed conveying the real estate to the limited liability company and record the deed in the county in which the real property is located. It is a waste of time and money to form an LLC to hold title and never deed the property to the company because you continue to own it and will be the defendant in a lawsuit.

Caveat Number 1. Even if you form an LLC and transfer the real property to the LLC, you will remain liable for your conduct. For example, if your LLC owns a rental home, you install a new water heater in the home, the water heater blows up and a tenant is killed or injured, you will be sued because you are the person who caused the harm by improperly installing the water heater.

Caveat Number 2. To avoid being sued after you form your LLC (see Caveat Number 1 above) eliminate or minimize action with respect to the LLC and its property that creates a risk that you will be sued. You have less risk of being sued when the water heater needs replacing if you hire a good plumbing company to do the job instead of doing it yourself.

One of the most common questions real estate investors ask is "if I own multiple investment properties, should I put all the properties in one LLC or should I put each property in a separate LLC?"

The answer to the question is that usually, every investment property should be owned by a separate limited liability company that owns only one property and that is not engaged in any other business activity. The reason is simple: to maximize asset protection.

Consider the fairy tale of the three little pigs. The three little piggies each owned three rental properties. The first pig owned his properties in his name. The second pig owned all three properties in a single LLC. The third pig formed three LLCs and each property was owned by a separate LLC. By sheer coincidence, the water heater in one of the properties owned by each pig blew up and killed a tenant.

The first pig got sued by the family of the deceased and lost all of his life savings when the judgment exceeded the insurance coverage. The second pig lost all of his equity in his three properties, but his other personal assets were protected. The third pig lost only his equity in the property owned by the one LLC and his personal assets and the equity in the other two properties were protected.

Asset Protection Rule Number 2 Hold title to investment real estate through a limited liability company. Most real estate investors known that the reason to form an LLC and to transfer investment real estate to the LLC is to reduce or eliminate the risk that the investor may lose his or her life savings because of a disaster with the property. If the water heater blows up at the rental property and you hold title in your name, you may be sued and a judgment that exceeds your insurance coverage could take your life savings. If your LLC owns the property, it will be the defendant in the lawsuit and you should not be liable personally unless you were the reason the water heater blew up.

Asset Protection Rule Number 3: Diversity your assets. The old adage "do not put all of your eggs in one basket" applies to real estate investment just like it does to any type of investment. If you satisfy Asset Protection Rule Number 2 and create a single LLC to hold title to your three investment properties and a disaster occurs on one of the properties, the creditor could reach all of the equity in all the assets owned by that limited liability company, i.e., all three properties.

Do Not Be Pennywise & Pound Foolish. If you buy three properties today for no money down, you will not lose much if you lose all three properties in the near future (but you might in the future when the properties appreciate in value). However, if you have $50,000 of equity in each property, you risk losing $100,000 that could easily be protected by having a separate LLC own each property. Consider the one time cost to form an LLC as an alternate form of insurance that you should not go without. The cost to form an LLC is peanuts compared to the amount you may invest in property coupled with the property's appreciation in value over time.