Starting a Business in Real Estate Investing???

Question

Hi All,

I am currently a full time investor and eBay business owner. Currently, my eBay business is setup under a sole proprietorship. I started investing in real estate several years ago and now want to make this my main source of income. My goal is to transform my real estate income into a second business. Any ideas on where I should start on setting this up? My main scope of work in real estate investing is rehabbing and attempting to make a quick profit (flipping). I have read that setting it up under an investment company can be tricky. I would like to discuss the advantages verses the disadvantages if possible. Anyone that has setup a business of this nature (I know a lot of you have) please give me some advice on where to go from here. Thanks, Justin

Justin Ashley · Answer

Just a follow up, I have named the company and bought the websites. I'm in the process of designing the website (which will take a little time). Also, I'm in the middle of remodeling an investment and trying to locate the next property.

For all you newbies, If anyone ever tells you this stuff is a cake walk don't listen to another word they say. It takes a lot of work and countless hours of research and networking. It is possible to start with nothing... Which I have done but I'm no where near the goals I have set for myself within the next five years. I wish all the investors in this forum the best of luck and hopefully we reach our investing goals.

Good Luck! 
-J-

Michael Rossi · Answer

Investing J,

Picking a name should depend on what you are trying to accomplish.  For example, to run a successful rental property business, several LLCs are needed because a large number of rental properties are needed to provide a cash flow that will support living.  I always name my companies a very generic name because I'm not trying to build a brand that people recognize.  Low income tenants don't care whether they rent from "Outstanding Properties, LLC" or "ABC, LLC".  All they want is a place to live.  If you are not trying to build a brand, the name is generally irrelevant.

Another consideration is advertising.  If you will have an ad in the phone book, they are listed in alphabetical order.  So, "ZZZ Properties" will be the last entry in the phone book and "AAA Properties" will be near the top.  Again, you need to consider whether the listing position matters for the type of advertising you'll be doing and how the name affects that position.

If you're trying to build a brand, then the name is absolutely critical.  As a flipper, if you're specialize in high quality, high priced properties, then you might want to consider building a brand that reflects that.  For "Solid Gold Properties", might suggest that you specialize in upper income/high quality properties.  If you're just a typical flipper, doing primarily middle class properties, "Solid Gold Properties" could hurt your business.

You also need to consider how your business might change in the future.  If you are now in the very low income rental business but may change to rehabbing and selling high priced property, "Flop House Enterprises" probably is not a good name choice.

Personally, I always name my businesses something generic.  For example, let's say that you're child's name is Kathy Lynn Johnson.  You might want to name your company "KLJ Enterprises, LLC".  A company with that name could do anything!  Or say that you love to snowboard, you might want to name your company "SB Endeavors, LLC".

I wouldn't get too caught up in the name.  Just decide what the name needs to do for you and go for it.

Good Luck,

Mike

Aaron A Bitto · Answer

@Matthew Mucker

Matt excellent post Thank you very much!!  I am Brand New to any business ownership of my own and have been searching the forums on BP for a very specific answer to this question.

Do you recommend forming an LLC before making any purchases??

Tom Sylvester · Answer

wiessman - Co mingling funds means mixing your funds from different ventures together.  For example, if you had an LLC but did not setup a separate checking account for the LLC, but instead used your personal checking account, that would be considered co mingling funds.  The reason is that you have your LLC (business) funds mixed with your personal funds.

If you are transferring money from your LLC account to your personal account, you are simply "paying" yourself and not co mingling funds.

And Mike - Thanks for your suggestions on naming.  I know a lot of people struggle with that topic.

Juan Michael · Answer

Good Question Weiss.......  I'm interested to know the answer to that question as well.

Jeff Weissman · Answer

This has been a very helpful thread! Thanks to all of you who have contributed. I wonder whether anyone can shed a little more light, specifically, on the guidelines pertaining to comingling of funds. For example, assuming I obtain a business checking account in the name of my LLC, pay any bills out of that account, & deposit net rental proceeds, is it considered "comingling" if I take a monthly "owner's draw" by transferring some funds directly into my personal checking account?

Jason Hanson · Answer

First of all, I am not a lawyer, yadda, yadda, yadda. Now that's out of the way, most people set up LLC's for their real estate investing business. They are very cheap and easy to set up.

As far as a name, I would use a professional name such as "blank" real estate group, or "blank" real estate solutions. I would NOT use any type of name that says we buy houses, or we buy houses fast.

You want a name that is generic enough to describe the many different roles you will play as an investor.

Jeremy Hardy · Answer

This is exactly what I have come across. if you have just a LLC the your llc will fiel taxes then those taxes will be reflected on your personal taxes. You really need help of an attorney to do thsi for you properly.

Calixto Urdiales · Answer

It is all ways a pleasure to hear you speak Mike.

:superman:

Justin Ashley · Answer

Thanks Mike,

Yeah I agree with everything you said in that post. My business name will need to meet my current plans and my future plans. I plan on building a brand name for this company. I'd like for the business name to reflect positively on my scoop of work. I have plenty of time to think about it. I have a couple homes to flip before really jumping into the LLC. Currently, I am just trying to get as much information as possible.

Starting a Business in Real Estate Investing???

Most Popular Reply