Building Wealth through Commercial Real Estate for the African American Community 

 Posted on January 18, 2023 in Real Estate

Aurora African-American Commercial Real Estate Attorney

Building wealth is financial empowerment. Building wealth through commercial real estate is important because green is the new strategy for upward mobility. The Martin Luther King Jr. holiday recently passed, and it is a federal holiday celebrating the life and legacy of the late Dr. Martin Luther King Jr. Dr. King had a dream of inclusion for all people regardless of skin color, or ethnicity. Different people celebrate Dr. King’s holiday in diverse ways. One significant shortcoming of the civil rights movement was a lack of focus on financial empowerment.

Nowadays growing up in the right area and attending good schools will have a major factor in your future success and employment opportunities. Individuals become successful everyday despite shortcomings in this country, but those individuals are often in the minority. Regardless of skin color or ethnicity, the value of the dollar remains the same for everyone. For example, $100 will only go so far regardless of your skin color or ethnicity. The new civils rights era must involve economic and financial empowerment tools because wealth and access to wealth is a major tool in providing for your family. Providing for one’s family provides educational and economic opportunities, which changes generations. Traditionally, African American families have lacked access and there has been a significant wealth gap in American. 

Commercial real estate is a powerful wealth-building tool. Commercial real estate provides the following benefits:

• Cash flow: Rental income that has the possibility of providing a stream of income to pay mortgages and to build equity.

• Appreciation in Value: Commercial real estate appreciates over the long-term providing opportunity for an increase in appreciation and value of the property.

• Tax Benefits: Commercial real estate investors are eligible for depreciation deductions and other tax-benefits associated with ownership.

• Leverage Opportunities: Commercial real estate provides leverage opportunities to create additional wealth, income, and other assets because commercial real estate provides collateral.

Commercial real estate ventures often occur because of joint ventures and a pool of investors. Joint ventures are an excellent way of building wealth and increasing one’s dream of property ownership. Commercial investment opportunities also contain significant legal and financial risks, which must be properly protected. 

There are legal tools, which can reduce one’s legal and financial risks. Creation of a business entity such as a limited liability company is an asset protection strategy. A limited liability company or otherwise known as an “LLC” is a type of business entity, which combines the flexibility of a partnership and the limited liability protection of a corporation. The LLC is considered a hybrid business entity because it provides flexibility and limited liability protection similarly to a corporation. 

For joint venture purposes, a multi-member LLC is the most-tool for a joint venture. A joint venture is where two or more persons enter a relationship for a business purpose to make profit. The multi-member LLC should have an LLC Operating Agreement, which is a written agreement describing the roles and responsibilities of the members and managers. Multi-member LLCs are often manager-managed, which means that a manager is appointed by the owners of the LLC or otherwise known as “members.” The managers manage the day-to-day investment and management responsibilities of the LLC.

The LLC provides the following benefits:

• Limited Liability Protection: Limited liability protection is provided shielding personal assets from liability concerns.

• Flexibility of Management Structure: LLCs have a flexible management structure that is customized to the specifics needs of the commercial real estate investment property(ies).

• Protection of Assets: Asset protection against divorce, creditor lawsuits, and bankruptcy.

Commercial real estate investments are illiquid and contain significant liability concerns because eviction lawsuits and other lawsuits will occur, which may threaten a member or owner’s personal assets in addition to their commercial property interests. Personal assets are not safe from legal action unless liability protections are set-up to shield personal, real estate, and business assets are protected. Commercial real estate is especially vulnerable to local economies and the strength of the business community and tenants. Due diligence and advanced planning are critical to commercial real estate owners.

We also can assist commercial owners with the following legal services:

• Commercial Eviction Services: Proper advice on how to properly evict and eliminate losses because of commercial evictions.

• Commercial Lease Drafting: Commercial lease drafting and review services to provide well-written and concise leases in case of litigation and eviction proceedings.

• Business Entity Planning: Set-up and business structure planning including the use of Series LLCs and use of holding and subsidiary companies including the use of trusts, partnerships, and LLCs.

• Coordination of Estate Planning & Business Planning Estate Planning: Coordination of business estate planning and asset protection services for commercial property owners.

Financial empowerment is a powerful tool in producing legacies that impact families for generations. Estate planning and commercial real estate law and asset protection involves multiple legal interests and requires a boutique law firm. If you need a well-qualified African American Commercial Real Estate Attorney in the areas of Plainfield, Aurora, Shorewood, Naperville, Lisle, Yorkville, or Montgomery, Illinois, please call us at 630-780-1034. We will be happy to discuss how we can help you solve your particular concern.