Best Way To Set Up A Real Estate Investment Company


Do Holding Companies Pay Taxes

Setting Up Your Real Estate Investing Business

Holding companies do pay taxes, though they can vary slightly depending on the organizational structure. For example, a holding company with one business owner will typically be treated as a sole proprietorship. This means the entity itself is not required to file with the IRS, and instead, owners will need to report all profits in their tax paperwork. A two-person LLC, on the other hand, will be treated as a partnership. This means each owner will be responsible for paying taxes on their share of the returns. For more specific information on how a holding company is taxed, be sure to consult a professional with any questions.

Set Up An Accounting System

Your real estate business, even if it is a sole proprietorship, will be filled for tax purposes. It will also need to track your cash flow. Therefore, you must have a bookkeeping and accounting system.

Accounting is all about keeping a record of your organization and financial information. Bookkeeping records and categorize your financial details.

Your new real estate business can start by hiring a bookkeeper on an hourly basis. The bookkeeper will be responsible for keeping your bank accounts and financial records. You can also hire the services of an outside bookkeeper to pay your bills and manage invoices.

Note that your business will need the services of bookkeepers and accountants to review your finances and tax strategies. You should be doing your accounting the professional way.

Therefore, hire a bookkeeper and accountant who is well versed in the real estate industry and tax preparations. The professional should also be able to formulate an effective accounting strategy for your business.

Write A Marketing Plan Packed With Ideas & Strategies

Running a business requires that you should be proactive when it comes to marketing your goods or services. If you choose to launch a real estate development business, then you must employ strategies that will help you attract customers or else you will likely struggle with the business because there are well known brands that determine the market direction for the real estate investment industry.

These are some of the marketing ideas and strategies that you can adopt for your real estate development business

  • Introduce your real estate development company by sending introductory letters alongside your brochure to households, estate managers, corporate organizations, businesses and other key stakeholders throughout the city where your real estate development company is located.
  • Advertise on the internet on blogs and forums, and also on social media like Twitter, Facebook, LinkedIn to get your message across
  • Create a basic website for your business so as to give your business an online presence
  • Directly market your services
  • Encourage the use of Word of mouth marketing

Recommended Reading: How To Invest Roth Ira Etrade

Have A Website For Your Business

When thinking about how to start your own real estate company, and how to give it a boost, make sure that it has a good presence on the web. Your potential clients make online searches to find out real estate products and services on offer.

But ascertain that your real estate website comes up on the top rankings of the search results on Google. A clear visible website at the top search result will mean that the consumers can reach your website, where you have put all the details of your company and business.

Your social media presence of the business is also part of the overall online marketing strategy. Use various social channels to form customer relationships. But build relationships also offline using a traditional outreach strategy.

To conclude, a real estate business requires a business plan and research of a niche market to find out the target consumers. The business starts with small money but finding out the investors is not difficult with a convincing business plan. Make strategies for a good online presence to drive consumers your way.

But make sure that your website design reflects your real estate business. Your visitors should come to know what your business is all about.

They come to know how your business stands out from competitors. So, include bio and photos of your business. Give high-quality examples of the real estate deals you made with clients.

Decide Whether To Buy A Franchise Or Start From Scratch

The Ultimate Real Estate Listing Presentation [+Free Template]

If you are looking towards starting a real estate development company, you would have to start from the very scratch because you can hardly get the franchise of a real estate development company to buy. Besides starting a real estate development company from the scratch is less stressful when compared to other related businesses which usually requires detailed groundwork and extensive paper work before launching the business.

With real estate development company, you should just try as much as possible to get the right employees, build business relationship with key stakeholders and investors and then leverage on every marketing tool within your disposal to market your properties.

Please note that most of the successful real estate development companies around started from the scratch and they were able to build a solid business brand. It takes dedication, hard work and determination to achieve business success.

6. Know the Possible Threats and Challenges You Will Face

An increase in corporate profit generally leads to higher business confidence, which bolsters demand for property. With wider profit margins, businesses typically expand to new locations, entailing the leasing or construction of new properties or facilities.

Some other challenges and threats that you are likely going to face are economic downturn and unfavorable government. There is nothing you can do as regards these threats and challenges other than to stay positive that things will work well for you.

Recommended Reading: Top Blockchain Companies To Invest In

Can Marketing Psychology Help You Increase Revenues

Smart marketers incorporate one or more psychological principles into marketing campaigns, content marketing, business strategy, and sales strategy. Here is everything you need to know about the important principles and theories that can supercharge your marketing and influence people to buy your products or services.

Consider Adding A Pr Firm

Whereas a marketing firm markets your company or product, a public relations firms goal is to improve your companys image through media and consumer contact.

It is no longer true that all press is good press. With social media and customer reviews, its sometimes best to hire a manager for your public image.

A PR firm can handle everything from social media campaigns and daily social media management of accounts to professional speech writing and media management. They understand social trends from both the analytical and social sides.

You May Like: What Can I Invest In At 17

Starting A Real Estate Investment Sole Proprietorship

There are many ways to structure your real estate investing business. Sole proprietorship is the most simple business structure in which you can operate a real estate investment business. It is not a legal entity, and all the owner of the business is personally responsible for its debts. You can choose to do rehabs as a sole proprietorship in your name, or a trading as name, without creating a new legal entity. While this is the easiest and least expensive way to become a real estate investor, there are many disadvantages.

One major disadvantage is that many real estate investment lenders will not lend to an individual because of legal restrictions in some states that require loans only be made to a business entity. Another reason that real estate investment lenders may not lend to a sole proprietorship is that the lender wants to avoid any possibility for the loan to be viewed as a consumer loan. As a whole, private lenders generally have a blanket prohibition on loans to individuals.

Doing business as a sole proprietor also exposes you to greater liability in an event of an accident at the site and greater financial exposure.

Lastly, there are less tax benefits when doing business under your own name than there are as doing business as a legal entity. Choosing to move forward under your own name may be the easiest, but not necessarily the safest or least expensive way to proceed.

The Best Entity Structures For Real Estate Investing

Setting Up LLC For Real Estate Investing (Your 1st LLC!)

In this episode of Toni Talks, enrolled agent Toni Covey is joined by special guests Eliot Thomas, Esq. and Troy Butler, Bookkeeping Manager at Anderson, to break down the best entity structures for flipping, wholesaling, and rental real estate.

Real estate investing is not a one-size-fits-all activity. There are multiple different ways to invest in real estate, running the gamut from hands-on, active income to hands-off, passive income. Three of the most common real estate investing activities I see our clients engage in are flipping, wholesaling, and holding real estate. So, lets talk about the different structuring options for each.

You May Like: Where To Invest In Us Stock Market

Use An Online Real Estate Investing Platform

If youre familiar with companies such as Prosper and LendingClub which connect borrowers to investors willing to lend them money for various personal needs, such as a wedding or home renovation youll understand online real estate investing.

These platforms connect real estate developers to investors who want to finance projects, either through debt or equity. Investors hope to receive monthly or quarterly distributions in exchange for taking on a significant amount of risk and paying a fee to the platform. Like many real estate investments, these are speculative and illiquid you cant easily unload them the way you can trade a stock.

The rub is that you may need money to make money. Many of these platforms are open only to accredited investors, defined by the Securities and Exchange Commission as people who’ve earned income of more than $200,000 in each of the last two years or have a net worth of $1 million or more, not including a primary residence. Alternatives for those who can’t meet that requirement include Fundrise and RealtyMogul.

» Ready to start investing?Best real estate crowdfunding platforms

Secure Financing For Your Rental Property

Youre already pre-approved, so now you need to finish the lenders application process. During this time, the lender will carry out something called underwriting, where they thoroughly check the information on your loan application as well as your supporting documents.

Some of the required documents include:

  • Complete mortgage application
  • List of current assets and liabilities
  • Rent roll, copies of leases

They will also verify the property information and order an appraisal, which you pay for out of pocket and is generally $300 to $500. An application fee is another cost that some lenders charge.

Lenders generally have different funding times depending on the type of loan, but usually, a hard money loan funds within 15 days, a conforming loan closes within 30 to 45 days, and a commercial loan can take up to 60 days to close.

Pro tip: There are also specific loan options for those who are intending to purchase distressed properties. For more information about this option, visit our article on fix-and-flip loans.

Also Check: Secondary Residence Vs Investment Property

Working With A Realtor

When youre starting out as a real estate investment business, you will be at a large disadvantage if you are not familiar with the real estate market where you will be operating. Unless you have a partner who is experienced in this industry, it may help to work with a realtor. A realtor can help you understand what properties are available and give you sound advice on what areas are growing in demand. They also can help with the contracts you will need in some statesalthough you may be better off using a qualified real estate lawyer when negotiating contracts for the purpose of investing.

In addition, a realtor can take on some of the tasks you may have less experience with, such as finding renters or helping you resell after flipping. A long-term relationship with a realtor you trust may be beneficial for your investment company, but it will depend on how you are investingand how hands-on you plan to be during acquisition of properties.

S To Start Your Own Real Estate Business

How To Start My Own Real Estate Business

Real estate is one of the purest forms of entrepreneurship that endures a series of risk-taking situations. Its amongst the most exciting industries with a lot of potential but a hell of ups and downs. If youre planning to start your real estate business, then take every step cautiously. This blog offers you useful tips that will help you to overcome your future challenges easily.

After you have worked for many years in the real estate sector and developed a keen sense of how things work, you want to start your venture. Is that so?

Many such experienced realtors end up owning a business in their niche and gain success. There is no reason that you cannot benefit from your rich experience as well.

All you need to start your real estate business is to take the initiative. You already possess the experience. However, before you move forward, know how to start a real estate business properly so that you do not have to face hurdles unnecessarily.

Surely, a well-planned business has the potential to grow fast. So, you should be knowing about everything from A to Z of establishing a business in this industry.

Know that you will face tough competition from many businesses that are already active in the real estate sector. So, it is a long journey from finding out a specific niche to setting up a shop and then winning the clients trust. Not to worry? You should take time to finally establish your presence in this highly competitive industry.

No Competition, No Success!

You May Like: Life Insurance And Investment Companies

Set Your Business Goals

Before you hit the ground running, take time to evaluate and prioritize your plans for the future. This means thinking through your personal, professional, and financial goalsas these will influence how you start and build your real estate investing business. Start by asking yourself where you plan to be in five, ten, and fifteen years. Then, strategize more immediate steps to help you get here. The importance of this process cannot be overstated. Goals not only help investors stay focused, but they also help them take action.

One framework I find particularly helpful is SMART goals. This stands for specific, measurable, attainable, relevant, and time-bound. Essentially, it helps investors balance ambition and action steps as they plan out the future. SMART goals operate in both short-term and long-term frameworks, making them perfect for any starting point. For more information on setting SMART goals, be sure to read our guide today.

How To Start Your Own Private Equity Fund

Private equity firms have been a historically successful asset class and the field continues to grow as more would-be portfolio managers join the industry. Many investment bankers have made the switch from public to private equity because the latter has significantly outperformed the Standard & Poor’s 500 Index over the last few decades, fueling greater demand for private equity funds from institutional and individual accredited investors. As demand continues to swell for alternative investments in the private equity space, new managers will need to emerge and provide investors with new opportunities to generate alpha.

You May Like: How To Start A Real Estate Investment Firm

Branding Tip #: Provide Value And Give People What They Need

Reputation and authenticity seem to go hand in hand in real estate. Michael Kelczewski a real estate agent for Brandywine Fine Properties Sothebys International, feels that people can sense non-verbal cues and behavior patterns. As a result, theres much less that can go wrong if you behave authentically.

Real estate investor, Eric Bowlin, holds the same belief. Real estate is actually about people more than the land, he says. As a small business in real estate, I think its more about branding yourself than branding the business. Make people want to work with you.

Starting A Real Estate Investment Llc Or Lp

How To Start A Real Estate Investment Company

Two other common business entities for real estate investors is the limited liability company or limited partnership .

The LLC can be formed by either an individual or multiple people .

The LP, by definition, requires more than one person.

LLCs and LPs provide some legal protection to their individual owners as liability for accidents, finances, etc. lies with the LLC or the LP . Both LLCs and LPs can be structured to be pass-through entities for tax purposes. What does this mean? A pass-through structured entity means there is no taxation to the business all income, deductions, etc. are passed to the individual partners.

It should be noted that not all members of an LP are shielded from liability. In most cases, LPs have both a general partner and limited partners. The limited partners can invest in the business and share profits and losses, but they do not actively engage in the management of the business itself. The general partner is responsible for all management but remains liable for the obligations of the LP.

You May Like: Top Investment Management Firms In Boston

How To Start A Real Estate Syndication Company: A Step

The best and easiest guide on how to start a real estate syndication company!

A real estate investment syndicate is one of the most lucrative real estate investment strategies if done right. Even though it is not a complicated process, you must be meticulous about it. However, before we get to the actual steps of forming a real estate syndication company, lets talk about what it is and what are the pros and cons of it so that you have the basics straight.

How To Start A Real Estate Investment Company

Real estate investment is a growing industry, and many people are curious how to start a real estate investment company and get a share of the unlimited possible returns offered. Unfortunately, many people who start such companies fail as quickly as they start due to a lack of attention to the legal factors at play. If you are considering starting a real estate investment company, a real estate lawyer from the Priori network may be able to help you get started on the right legal footing.

Also Check: Mercy Corps Community Investment Trust


More like this

Best Real Estate Investing Advice

There Is...

Series 65 Registered Investment Advisor

Who Needs...

How To Become An Sec Registered Investment Advisor

Competitors In...

Investment Account Sign Up Bonus

Acorns $25...