Texas real estate is a booming industry, and savvy Texas entrepreneurs have discovered that investing in it can be a lucrative and fulfilling business. There are many ways to create a real estate investment company start-up, from investing in rental properties to purchasing short-term flips to buying and holding properties for the long term.
In this blog post, the Curley Law Firm team will guide you through some of the basics of how to start a real estate investment company. We will discuss the difference between investing in properties and trading or “flipping” properties. Finally, we will cover a few of the requirements needed to start a real estate investment company to help you on your way to purchasing your first investment property.
Investing in Real Estate vs. “Flipping” Real Estate
Real Estate Investment
The two main business purposes of real estate investment companies are to invest in properties and trade properties. Investment is a long-term investment where an investor purchases property to hold for an extended period of time and to rent out. Trading is where an investor buys a property at a discount with the intention of quickly fixing it up and selling it for a profit. This type of trading is also known as “flipping.” Investment requires higher initial investment and typically takes longer to turn a profit, but it can be extremely profitable over time.
Real Estate Trading
Real estate trading typically requires a much lower initial investment and can turn a profit faster, but it is also an incredibly risky investment. While “flips” can be profitable if they are successful, a trader’s profit margin can shrink fast if properties do not sell quickly.
Understanding your own skill set, investment style, and resources can help you choose how to start your real estate investment business. There is no single way to be successful at investing. Speak to a trusted financial professional if you have concerns about the initial investments needed to support your investment company. An experienced business lawyer can also help you understand the legal risks of different types of investment.
How to Start a Real Estate Investment Company: What Are the Requirements?
Legal Business Entity
Speaking to a Texas lawyer about creating a limited liability company (LLC) or other legal business entity is an important step in starting an investment company. While some entrepreneurs operate their businesses as sole proprietors, having a legal business entity in place is important to protect your personal assets and minimize personal liability.
Speaking with an experienced Texas business lawyer can help you with this part of starting your company. The experienced Texas business formation lawyers at the Curley Law Firm are ready to help you take the next step in your business. The Curley Law Firm helps Texas entrepreneurs incorporate their businesses, form LLCs, and create other business entities to establish and grow their businesses.
Having a clear investment strategy affects what legal issues you need to consider and the type of business entity that will best protect your interests. This includes deciding whether you plan to focus on investing in properties long-term or trading them quickly. However, it also includes such considerations as whether you plan to invest in residential or commercial real estate, or whether your focus will be on single-family or multi-unit properties. Having a good, clear investment strategy can also help you attract co-investors or partners if you decide you want to obtain financing through partnerships or joint ventures.
Real Estate Financing
Starting a company often requires a significant upfront investment. Depending on your personal and business credit history, as well as your other business obligations, financing your real estate ambitions can sometimes be a challenge. When forming an investment start-up, Texas entrepreneurs often consider a range of financing options, like loans, partnerships, joint ventures, and even short-term financing.
The Curley Law Firm Difference
When you are ready to form your real estate investment business, turn to a trusted and knowledgeable business attorney. Planning ahead can help you future-proof your business, especially because so much real estate investment is a long-term game. Help protect yourself from unforeseen problems by doing your research and ensuring that you have the right structures in place to protect your personal assets as well as your business assets. If you are working with others, make sure the important stuff is in writing. A Texas business lawyer can help with all this. Our firm dedicates its time to helping Texas businesses flourish by effectively addressing critical tasks early on. With over a decade of experience helping Texas entrepreneurs thrive, Adam Curley is the business lawyer you can count on. Call us today at 832-225-3448, or contact us online.