Today, I want to focus on the process of starting a real estate or note business. Let me first say that I am not a tax professional, attorney, or a business expert. Please consult those experts who know far better than I do. What I share comes through many years of experience and many errors along the way. Here are the steps that I would encourage you to ponder:
- Do I want to do real estate and/or notes via an IRA… hobby, part time gig, or as a business? You can be a real estate or note investor without being in the real estate or note business.
- What is going to be your initial focus on your real estate or note investing? Real estate notes… long term rentals… short term rentals… wholesaling… fix and flip… etc. What aspect of real estate note or real estate interests you the most?
- Get help and counsel- Mentor… work for another investor… Master Mind group.. coach
- Decide what type of business enity you will have- LLC, C Corp, or S Corp Consult an attorney or tax professional
- What will I name my business? Too narrow a name may not be good. Real Estate in the name may not be good for funding purposes.
- Register your business with the Secretary of State office (file annual reports)
- Get your EIN number from the Internal Revenue Service (fairly easy; less than 5 min.)
- Prepare or have prepared the operating agreement for your business. This might be important in opening bank accounts.
- Open bank account(s) Note: There are some banks that do offer free business checking.
- Establish a financial plan- treasurer, accounting software, keep good financiai records and receipts, tax professional, etc.
- Decide on ways to protect your assets from suits, taxation, etc.
- Decide how you are going to fund your business- personal $$… credit cards… HELOC.. borrow from insurance policies… hard money lenders… bank loan… etc.
- Share the news about your business- tell your friends and family… calling cards… web site… social media sites (e.g. Linked In, Facebook, etc.) You or someone needs to maintain social media sites and/or web sites
- Cultivate relationships with potential vendors and future clients- contact list via REIA meetings, meet ups, etc.
- Set a business plan and goals and review and/or adapt regularly
- Be patient as you work the plan
These are a few tips that I would encourage you to consider. Feel free to write in the comments section tips that you would recommend. Best wishes in all your investing pursuits.- — RL Wall