Starting A Real Estate Investment Business. 5 Important Things To Know

how to start a real estate investment business

Introduction To Real Estate Investment 

A real estate investment business can be a very profitable business venture but it requires the right know-how and other resources in order to, first, enter into the industry, as well as run the business successfully. 

While the generally held view is that it requires a lot of capital outlay to be able to enter into the real estate industry, times are changing locally and in many other parts of the world where the credit culture is becoming part and parcel of many societies, and at such, you will find that most people who have a regular source of income and/or a good credit rating will often be able to access the credit or mortgage necessary to finance the purchase of a property. This is even more so if the property in question is intended to be an income-generating property. 

If you plan on starting a real estate investment business, business there are 5 important things to know in order to get started that can increase your chances of running a successful business. 

1. Establish A Company To House Your Business 

After the important step of arming yourself with the right education and knowledge about the industry, perhaps one of the first things you should consider doing is to set a formal business entity under which your property business will be housed. The specific type of entity you create will likely depend on your specific preference or circumstance, but it is safe to assume that one of the simplest things you can do in this regard is to either create an LLC or a corporation. 

Some people are often able to go through all the steps to form this company by themselves, while others would rather just contact a business lawyer to get it done for them. 

More often than not, an LLC is preferred to a corporation as it is a simpler entity to start and run. The importance of setting up a formal company to ‘house’ your real estate business is because it acts as a shield between you the person and the company. The most important reason for wanting this shield is because of the fact that it protects you from being sued personally if the company gets sued, but it also protects your personal assets such as your home, vehicles, investments and bank accounts. 

By setting up an LLC, you and your business will be regarded as two separate entities. Therefore, should your real estate investment business face some sort of financial strain, such as being unable to pay back the loan you acquired to finance the property purchase, your personal assets will be protected and, under normal circumstances, cannot be seized in order to compensate for your business’s financial shortfall. Besides personal protection of assets, an LLC potentially also comes with tax benefits such as being able to include several tax-deductible business expenses. 

2. Open Separate Bank Accounts 

When you set up an LLC for the business, it is a separate entity and therefore it should have a separate business bank account. A separate account allows you to separate your personal finances from your business finances. Doing this helps in keeping up that ‘veil’ than an LLC provides for you, which means that you should never use company funds for personal expenses. 

At times it may be hard to distinguish between a business expense and a personal expense but a laptop or broadband internet could also be categorized as a business expense if it is being used to conduct your business, even though you sometimes use it for personal work. Meeting with certain investors for coffee or lunch is also arguably a business expense. However, you should be sure to keep track of all these expenses so that it is taxed accordingly and you are not breaking any tax laws. Another advantage of a separate business checking or bank account is that it allows you to capture all your data related to your business expenses and income accurately. 

3. Find A Property 

The most important part of starting a real estate investment business is the actual buying of the property. Do your research on the property market and identify key areas that you are interested in buying in. Also, keep up to date on planned developments in your city. There are many property listing websites and portals all across the internet, so the search for your ideal property has been made much easier. Over and above using websites, networking with real estate agents and other people who are more experienced property investors is also a very good idea and is a great way to find a good investment property to start your business. Real estate agents come across all kinds of deals as they have a large network of clients and information. 

4. Secure Financing For Your Investment Property 

There are a number of ways in which you can secure financing for your investment property. If you have been saving up for a while and you have the capital to finance your property by yourself then that’s great. However, for most people, some form of financial assistance will be required. In this case, the several financial institutions that were previously spoken of can come into play. It is important to note, however, that being able to finance a property purchase will often require that you meet several strict requirements that these institutions put in place to protect them and the chance of default. 

Lastly, with the rapid rise of the startup culture, there are various alternative lending institutions besides traditional financial institutions. Peer-to-peer lending is just one example. It is very possible that one of such companies might be a viable option for securing finance for your property purchase. 

5. Close On The Property 

Closing on a property is the final and usually most rewarding stage of purchasing a property. It is when the property is transferred to your name and you officially become the new owner and titleholder. 

Before closing on the property purchase with the help of a real estate closing attorney, however, a title search will no doubt have been conducted to make sure that there is no shady business surrounding the property in question. This search will confirm a property’s ownership and will help determine whether there are any claims on the property by the third party. If there are claims on the property, this should be resolved before transferring the property onto your name. It is for this and other reasons, that the presence of a real estate lawyer is crucial in every step of a real estate transaction. 

Besides and before finalizing the deal, a home inspection of the property will and should also be conducted to ensure that the property has no major structural defects and that any other minor defects are fixed by the existing owner before it is transferred to the new owner. 

Finally, it’s important to understand all the legal documents included in the agreement. This is something that your real estate attorney such as https://www.kazmilaw.com/wills-and-estates can assist with to ensure that you fully understand what you are agreeing to. 

Start Investing In Real Estate Today 

Starting a real estate investment business is not easy and it involves lots of planning in order for it to successfully take off. There are several legal steps involved which should be adhered to and having a real estate attorney and/or agent to advise you will definitely make the process easier. In the long run, a real estate business can be extremely profitable when it is done correctly so you can build your overall business house as discussed in greater detail on https://lifestylebyps.com/blogs/make-money-online/easy-steps-build-a-big-business-house.

Above we outlined 5 important steps that serve as a guideline to anyone planning to start a real estate investment business. By following these investment property guidelines you will lay a solid foundation for what will hopefully be a profitable and fulfilling business. A great option for investment properties can be found at Ssbhg.ca for those looking to get started immediately.

Kanayo Okwuraiwe is a startup founder, an incurable entrepreneur and a digital marketing professional. He is also the founder of Telligent Marketing LLC, a digital marketing agency that provides law firm SEO services to help law firms grow their law practices. Follow him on LinkedIn.

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