start real estate holding company

Useful Tips to Start a Real Estate Holding Company

Becoming a realtor in Florida is your one-way ticket to putting up a real estate holding company. It’s a legal entity that will help you reduce risk in protecting an asset and protect property owner information.

This could hold a single asset or act as the parent company to various properties – also known as the subsidiaries. When becoming a realtor in Florida with plans to start a real estate holding company, you must have strategies and plans to get the job done right.

This article will make it easier for you to start a real estate holding company. Without further ado, let’s get started.

A Guide Towards Starting Your Real Estate Holding Company

Check out these steps to start your real estate holding company.

1. Choose a Business Name

Just like choosing the real estate company name, keep it short enough as you will continually write it on tax and lease documents. Remember that the LLC name could also represent the brand, so you must be creative in protecting yourself from the competition.

The company’s name should also include the name of the investment company, personal name, or even the property’s address. And if privacy is your concern, you should choose a name that is not easy to recognize.

This could be the case if you are a public figure or the landlord who had issues in the past and wants to keep the matters private.

Furthermore, you should also keep in mind that investors should come up with real estate holdings that are easy to remember and represent the brand, product, or even services you provide.

When you find out the business name you desire has been taken, perhaps you can make adjustments to approve it.

2. File and Gather Documentation for Articles of Organization

Forming an LLC for the business usually varies by state. So, once you’ve already chosen the name for the real estate holding corporation, the next thing to do is file Articles of Organization.

When you determine the business name and address, the “Articles of Organization” documents should be filed with the state’s LLC office – the Secretary of State.

The document is usually available as the fillable form that is usually found on the website of the Secretary of State. The instructions are already provided, so it would be easier to submit them. Once everything is prepared, the document shall be submitted via mail or in person.

3. Hire an Accountant or Attorney

Next, you should consider hiring an accountant or attorney when you start a real estate holding company. Even if creating the LLC yourself is easy, having an expert lawyer can help you start a real estate holding company. They have much experience and inside knowledge of the best practices.

Lawyers will also help you create the LLC and the entire process of selling, buying, negotiating terms, renting, and protecting long-term assets.

And since the holding company for real estate is a large investment, always make sure you are taking advantage of the benefits of the holding company. That’s why you need a real estate accountant to assist you in maximizing the cash flow and tax deductions for the business.

4. Obtain Permits and Licenses

As part of the requirements, licensing and regulations for LLCs may also vary in each state. You must check with your Department of State to comply with these requirements.

Note that many states require LLCs to do business for them to get a tax registration certificate and allow them to conduct business in specific areas.

If you’re also a developer or you perform renovations on the property, you may also be required to obtain construction permits and comply with zoning laws and even the local codes.

5. Open a Bank Account

Should you have a legally separate bank account for your business and never combine it with your savings account? Why? It is for you to easily monitor your business’s cash inflow and outflow.

To open a bank account for your real estate holding, you should have the EIN. The business bank account for your business bank account will help in managing finances. The separation is the requirement to protect personal liability from the business.

To benefit from this, the investors must never commingle the financial affairs by using the company’s money for personal reasons. Even with the company credit cards, they should always be created under the business’s name and used exclusively for business.

6. Close on and Purchase Properties Under LLC

If your investment property is under your name, you may also want to transfer the real estate holding property to the newly formed LLC.

This will also require you to record the changes on the deed. The title company would be able to assist with the process. Yet, if the current property comes with a mortgage, you must also contact the lender. Because sometimes, the lender will require you to pay mortgages in full right before transferring the property.

Wrapping Up

You might seem intimidated at first if you are new to real estate and learning to start a holding company. But always remember that investors must always protect their assets and reduce risk, especially if they plan to invest in many properties.

Also, the benefits when you have your real estate holding company may outweigh the costs of starting up. That said, investors should always take advantage of the benefits and make their best decision for the real estate holding business.

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