I was just curious as to the difference in between for-profit and non-profit organizations when it comes to setting up a real estate company? I am really looking to being starting an entity that would work with lower income andor working class families in Texas. I have done some research and found a couple different organizations who are doing what I have envisioned in my mind. This may be way beyond the scope of this forum, however, I was just wondering what kind of thoughts you all might have? Thank you very much for any help you might provide.
This may be a better post for the Legal Section. From my understanding for-profit means just that. The purpose of your business is to produce revenues and/or assets to be distributed back into the business or as “income” (not the term, just can’t think of the correct term) for the principles/shareholders of the company. A non-profit distributes anything it makes over operating costs into whatever its mission is. Example: You sell a house to a low-income family at say 8% interest. Say 5% of that interest is used up by operating costs the remaining 3% would be rolled into a fund or account or whatever to be used as funds for the next family you are wanting to help.
This is a very simplistic explanation but hopefully you get the gist. I may be wrong. If I am somebody correct me.
Mike, I think you are taking very simplistic look at the 501(c) 3 organizations. There is a wide range of things that can and can’t be done according to law. I am interested in this because I want to start working in a sector that I think I can not only maximize my own growth as a young aspiring developer as well as engaging in my need to do more for others. I’m not saying that making a profit is not my ultimate goal, but I believe this will allow me to really and truly begin to understand how the game is played on a larger scale than flipping SFUs and Duplexes. I have no idea what you invest/manage but I am sure you are very successful in your ventures. I have HUGE plans for the future and on the surface I believe this would help me get to the end that I will be finishing at. Might as well not worry so much about the dollar bills and more about the knowlegde and experience, while I am young and single. I know it isn’t what this forum is really about, but maybe helping others while learning along the way will help me become a much better investor at a later date when I decide to attack the “real” world of investing.
Phlegmaticjay, thanks for the info. I know exactly what you mean. I am looking to work with govt programs to rehab larger properties and in the more rural areas close to where I live. I know it sounds like of dumb, but I have had the great fortune to speak with a couple organizations who are non-profit however, their companies do very well for themselves indeed. Will continue with the research.
I can see THE “why”. And I wish the best of luck to ya. I’m taking the backwards approach, mostly because, well I have college educations to start paying for coming up fast. But eventually when I have the money, I want to start helping people out myself.