As a follow-up to BiggerPockets’ amazing Ultimate Beginner’s Guide to Real Estate Investing, here are some Beginner Business Basics. By implementing these few important pieces, you will be ready for buying, selling, and making money in real estate!
1.) Be Gentle With Yourself.
You’ve probably come upon real estate investing with a goal to buy and sell houses and make a lot of money. That will happen, but don’t expect big money too soon or you open yourself up for disappointment. Be aware that an opportunity to make a lot of fast money brings with it the opportunity to quickly lose a lot of money. It’s easy to be taken out of this business with your first deal. Instead, use the wisdom shared on BiggerPockets to help guide you into safe waters. And, if you do find that gold mine of a first deal, seek out a trustworthy seasoned investor to help lead you through it.
2.) Treat Your Investing as a Business.
Right from the beginning treat your buying, selling, holding, renovating, flipping, and wholesaling as a business. Set up some structure, create a solid foundation that will enable you to operate efficiently and so you don’t need to buy or sell properties in your personal name. You won’t want buyers, sellers or tenants to search for you online and find everything your own. And, you need a business that is properly structured in order to qualify for of all the tax advantages available to property owners.
3.) Learn the language.
Real estate investing has a language of it’s own. Hook up with local investors. Start attending real estate investor groups (you can find ones in your area by searching NationalREIA.com), and join your local Landlords Association. The people who attend these meetings are doing what you want to do and you’ll pick up on terms, definitions, and vendors that will become a part of your business. The groups also offer monthly trainings on a variety of topics. These group meetings are where most investors begin their investment education.
4.) Pick a Company Name.
You need a company name for doing business and for your marketing. First, check to see that the URL is available through a site such as GoDaddy. It’s beneficial to have your company name and domain name be the same. That way, when people search for your business online, they are automatically directed to your website. Second, before purchasing the domain, check with your Secretary of State to make sure the company name is available in your state.
5.) Create a Business Address.
Never use your home address (for a list of obvious privacy reasons). Get a mailing address through a UPS store or somewhere like Mailboxes, Etc. so that you have a physical location address, not a P.O.Box. A physical address gives far more credibility than a P.O.Box which is always seen as temporary.
6.) Set up a Designated Business Phone.
Set up a designated phone line that is used only for your business. It’s important that you know how to answer when the phone rings. And, if you have a W-2 job and can’t answer the phone during working hours, you need an appropriate message on your phone so callers know they’ve reached the correct business. If you can’t answer during the day, that’s fine, just let your callers know that with a message as simple as, “I return phone calls between six and eight p.m.” That way callers understand when you don’t return their call promptly. An inexpensive way to get a designated business phone is with an added number through with your cell provider’s family plan.
7.) Business Cards.
Purchase business cards. You’ll need these sooner than you think to hand out to everyone you know and meet. Be sure they include your name, your business name, your business phone number, your business email address and, hopefully very soon, your website.
8.) Set up Your First Entity.
The preferred type of company/corporation for real estate, in my opinion, is a Partnership LLC. LLCs offer the best business structure and most tax advantages for property owners. Have yours set up by an attorney who understands both real estate and tax law so that the proper legal and tax structure is created through the LLC operating agreement. Don’t try to save money by purchasing an online LLC – they are empty and provide no protection or tax advantages. Depending upon how large your investing business becomes, you may need additional entities, but a Partnership LLC is the place to start.
Yes, you need one. Your customers will check you out online before they even call. The best websites have a contact management back end for storing client and property information but, starting out, you at least need the front end, a face for the public that shows you’re a legitimate business and describes what you do.
Your Next Steps
Now you’re set up. You’re ready to start marketing to the world and talking to buyers and sellers. You’ll have lots of questions along the way, we all do, but you’ve found a great resource in BiggerPockets. Again, be gentle with yourself – don’t be overwhelmed by all there is to know in this business and don’t feel like you need to know everything before you start. Plan to learn something new everyday and, a year from now, you’ll know a whole lot more than you do right now.
Let me know how else I can help and — here’s to your investing success!