Some people are drawn towards real estate investing as it promises huge returns while some are naturally inclined to this business as they find their calling in real estate investing. Whatever be your reason for getting into this business, you ought to be prepared and arm yourself with the right knowledge if you wish to ensure success.
Money indeed is an important aspect of real estate investing but there are die-hard investors who have established themselves with little or no-money. So you need to be absolutely passionate about the business to succeed, money comes secondary.
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Investing in real estate has become hugely popular over the last five decades and many people have changed their fortunes by investing in this industry, but you need to know that it is a complicated business. It is not as simple as investing in stocks and bonds. Just as the gains are high, stakes are also high in real estate investing.
You need to be absolutely sure about your desire to be in the business. For this you need to make a thorough assessment of your strengths and weaknesses before you take a step forward.
Ask yourself what are your likes and dislikes. Whether you will be comfortable talking to prospective tenants/sellers and negotiating with them? What kind of lifestyle do you envisage for yourself and whether being in real estate would help you realize that.
You need to think hard over your business strategies. Most importantly, in the case of real estate investing you need to think how you are going to generate funds and credit. If you think you cannot get a loan, you would need to look for a partner. If you can find a seasoned investor it would be good for you.
Once you finalize your business strategy you need to work out a marketing plan. A fruitful marketing plan will help you generate leads and help you find houses for which you can make offers. You also need to have a marketing budget ready. If you have limited resources you can be creative with your ideas but you certainly need to have a plan to generate leads or you will soon be out of business.
Most business start-ups venture out as a sole proprietorship. Once they achieve success, they upgrade themselves into an S-Corporation or a Limited Liability Corporation (LLC). It is easy to start a business as sole proprietorship as it has few legal hassles.
To get into the business, you would need to have an occupational license. This is important for any business or occupation. You need to contact your local tax collectors office to get the same.
In case you want to start a business in name other than yours or if you are operating as a business entity, you may need a Doing Business As (D.B.A) Certificate.
A Federal Tax Identification Number is given by the I.R.S to identify a business unit. Similarly, you would need to get a Tax ID number. You can visit the IRS website to get the same.
Once you have established your business identity you would need to open a business banking account. Look for a bank which is popular with small business owners.
Small businesses usually have a tough time convincing a bank to provide them loan. To make sure you succeed in this crucial aspect of starting a business, have a plan ready. Be very thorough with your planning and show confidence in yourself. In case, your application is rejected, ask the bank to tell you the reason for rejection. Work on the problem areas before you resubmit your application. To increase the probability of getting a loan, apply in several banks and not just one.
For the benefit of upcoming entrepreneurs Government has started a Small Business Program (SBA). Under this program, small business owners are provided with business planning and management counseling. Before starting your business you should visit your local SBA office to get the necessary guidance. They also offer educational CDs and books to help you prepare a business plan.
If you have the attitude for real estate business and you are ready to put in the hard work and even burn mid-night oil don’t think twice. This business rewards handsomely to hard working passionate individuals. Just follow the legalities, choose the right partners and take calculated risks, you will surely succeed.
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