I am currently considering getting started with a friend of mine in real estate investments and just had a couple questions.
Do I only need a basic LLC to get started?
Do I need to have a real estate license?
What basic contracts are invovled?(I’m using credit investors)
*No, as an investor buying and selling for yourself you don’t need your license.
*Yes, an LLC would be wise or some other form of asset protection something that your lawyer or Tax account can help you with better than I can.
*Basic contracts? seller’s disclosure, investor’s disclosure notice, standard contract for sale/purchase and that’s about it.
Beyond that the first step I would suggest:
Read. Read until your eyes bleed and then read some more. Once your head is spinning with all the possibilities available keep reading. After you’ve read, analyzed and absorbed everything you possibly can… Ask others what they have read and read that too. If possible find a “Teaching Agent” someone who is a real estate agent or broker that likes to answer basic questions about simple transactions preferably one who is an investor themselves.
Then ask questions about the areas that confuse you most or that intrest you most.
Each REI deal has thousands of dollars riding on it going well, it’s not something that is a cut and dry recipe for success… There are many variables to consider, and for each single variable that you alter there are 1000 different answers to the equation… That’s why REI works for so many people from so many areas interested in so many different things. If REI were as simple as 2nd grade addition then we could give you a step by step answer to your question, but it’s not. REI is like multiple variable calculus too many things change from exact transaction to exact transaction. What is legal for me here in the Houston area of Texas may be illegal in other states, and in Texas Subject to or L/O’s are illegal.
If you’ve already done a bunch of research and have an idea of what it is you want to do, what area you want to work in, you might want to share with us what that is. The more detailed and specific your question the better we can help answer your concerns. Under the assumption that you have not done any of that research yet, I composed my response to address that fact.
Before you act and you try to do your first deal there is a lot of information you need to try to acquire, about yourself and REI business. Then you have some legal matters to get in line, and you need to be sure your ducks are in a row if you want to have your transactions go through smoothly. So the biggest, most time consuming, most important step you can take is to gather the information on your local RE law, etc. Learn everything you can, and when you think you’ve learned everything you can find 10 more things to learn. When you think you know everything there is to know about REI is when you get sued because you’re not up to date on the latest laws.
No, as an investor buying and selling for yourself you don’t need your license. Yes, an LLC would be wise or some other form of asset protection something that your lawyer or Tax account can help you with better than I can. Basic contracts? seller’s disclosure, investor’s disclosure notice, standard contract for sale/purchase and that’s about it.
Hope this didn’t scare you off too badly, and helped at least a little bit.
Red
Rebeccah has given you some excellent advice on generally starting out.
From you post, I’m also going to say that you’re probably not ready to jump into investing yet. Definitely need to do some more reading.
As far as contracts/forms go for buying property, keep it simple and use an agent. They’ll make sure that your legal and proper.
And where Rebeccah and I aren’t in complete agreement is starting an LLC. Generally speaking, forming an LLC BEFORE you begin investing is NOT that important. Why? Because the new investor geneally doesn’t have assets to ‘protect’ and you can’t buy residential property in a newly created LLC. Plus, most people never actually buy an investment property and so, have wasted money and time creating, and having to dissolve, a LLC.
That said, in your case, once you are to the point of starting to look at properties, I might suggest an LLC simply because you are planning on working with a partner. Forming a LLC will solve alot of the trouble of who supplies what and who gets what.
Hope it helps,
Raj