I’ve been getting questions lately from readers to this blog and visitors to our main site about how to start their real estate investing company. It’s great getting these questions… it shows that people are taking action and getting something done rather than sitting on their a$$ hoping success will just come to them.

Although I’m not a CPA or business planner, I have set up several companies for myself and other people both in the real estate investing area and out. I paid for the advice from my CPA on how to start my first business… but I’ll pass my knowledge on to you for….

… you guessed it… FREE!

If you are at all serious in your real estate investing goals you NEED to (at the minimum) create a company to “house” your real estate investing activities.

No company = NOT SERIOUS!!

Not serious = DOOMED TO FAILURE!!

So…

Let’s get that real estate investing company created and get you on your way to creating a lasting and profitable company.

There are several steps that you need to take in order to create your real estate investing company. Each of these steps are very important… but not one step is too difficult that you cannot do it yourself… or with a little guidance from your CPA or other professional advisor.

Before you start… we have a more in-depth section on creating a real estate investing company in our business section.

I’ll go over the first two steps in this post and the rest later this week… I’ve found that many people learn easier if they digest it in smaller pieces. So… you’ll get the rest later this week.

(let me know if the “smaller pieces” theory works for you. If I hear from more people that it doesn’t… I’ll quit breaking my posts into multiple parts. This blogs for YOU!:)

STEP 1: Decide on a creative, descriptive, and memorable name for your company.

This part is pretty darn easy. If you don’t already have an idea of what you want to call your company, grab a piece of paper and just start brainstorming. Write down anything and everything you can think of for the next 5-10 minutes. Don’t be shy… write down anything at all that comes to your mind no matter how stupid it sounds.

When deciding on a name be sure to keep it creative yet simple. Don’t use the same ol’ name that everyone else in town is using. Think of something that when people hear it they will say, “that’s a name I’ll remember”. One good company name I have heard of for real estate investing companies is Dreambuilders Inc. It’s simple and gives the prospect an idea that you are there to help… not to harm them. Anyhow… you know better than I on what your name should be… so choose on a name for your company.

STEP 2: Decide on a business entity

This is the part that may take a bit of customized advice from your professional advisors. There are several very valid business entities to choose from… but they all fit their purposes. For instance… many CPA’s will tell you that an LLC is a great entity to hold real estate. It’s true, I have an LLC that fills that one and only role. That LLC holds my rental properties, collects the rents, and pays the bills… nothing else.

On another hand, a good entity for flippers, wholesalers, etc. who won’t own and hold real estate might consider some type of corporation like an S Corp. S corps have benefits of a corporation and some benefits of an LLC. With an S corp, income passes on through to the shareholders and doesn’t get taxed twice when paid out to the shareholders.

Anyhow, go on over to our business entity assistant (from bizfilings) and let it help you choose the right entity for you. This step is very important because it is what determines how your company is taxed, how you must keep records, how you as the owner can get paid, etc. A quick disclaimer… I have to tell you that you should have your own CPA review your decision before you steamroll through the process. It’s always good to move forward fast… but make sure you are doing it prudently.

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In part 2 you’ll learn how to file the paperwork in the state’s you do business in and how to register for your EIN (Employer Identification Number). These are two VERY important steps and need to be done right. I’ll walk you through step by step in the next posting.

So… get going on creating your business name and figuring out what business entity you should use. If you have questions on any of the business entity types don’t hesitate to shoot me an email (trevor[at]thereibrain[dot]com). I’ll try to help you out a bit on your decision process.

Until next time…

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