Wholesaling Law

[Andrew Mazzenga]

I have been building a business plan to start a real estate investment company for the past few months, i have been doing my due diligence in just about every aspect of the real estate industry as well. I believe that i will need to start by wholesaling properties in the Philadelphia region in order to build some capital to begin my venture and begin to search for capital investors a little bit down the road which will ideally lead to flipping properties and then to buying and renting properties out.

I have been having a hard time finding out about the laws around these wholesaling deals. Do i need to be bonded and/or insured to do these, and also i feel like i would need a real estate license since i am all but brokering a deal between two parties. Also do i need to start an LLC or and S-corp for thease type of deals? or am i able to just go to the closing table as an individual? This may be a stupid question but its worth the time to ask.

If there is a website that i could refer to i would be a happy camper. I have been a mortgage loan officer for about 4 years so i know that there are strict laws around real estate at the moment. the very last thing that i want to do is get tied up in a legal matter that i cant get out of.

Thanks so much for your time and input in advance!!

[Dan Romero]

Hello Andrew,

My name Dan Romero and I'm also starting a wholesaling business in the south jersey area not to far from you. The best advise I can give you is to talk to a lawyer that is very familiar with the real estate laws in your state. I know laws vary from state to state so I don't want to give you any false information. I have spoken to a real estate lawyer in NJ about the laws in wholesaling and after a lengthy conservation on trying to explain what exactly I'm trying to do he affirmed that it is legal to get a contract from a seller as long as you disclose exactly what you're trying to do. Now that doesn't mean that you have to disclose how much money you're getting from the deal. Technically you DO NOT need a real estate licence to do wholesaling but make sure to check your state laws with a lawyer. With that said I would recommend for you to get your license since it can help you get expired listings from the MLS which only a license Realtor can do. As for LLC you'll will need to get one eventually for tax purposes but for your first couple of deals you get you can get away by just using your name. I hope this information helped, if you need some more information on wholesaling just let me know and we exchange emails.

Stay focused.