Rehab real estate investing can start out as a part-time gig for significant additional income. When you start flipping at least 6 houses a year, then it becomes a well-paying job. From teachers, general contractors, policemen, entrepreneurs, and small business owners to doctors, lawyers and financial advisors, anyone can make money flipping houses if they are determined to shift their attention, see the big picture, and do the work.
If you have more money up front, you may want to start gung-ho. Cogo can provide the private money until you get enough experience and wealth accumulated to keep the business moving like clockwork. If you have little to no money up front, you can still secure your future through a logic based loan. If it makes sense, no matter the property type, we will bend over backwards (jump through every hoop imaginable on your behalf) to make it work.
How To Set Up Your Fix and Flip Investment Business
In setting up your rehab business, you have some basic administrative tasks you need to do to establish your business. There is a ton of work involved in making your business successful, but for first time fix and flip investors, the following information will get you in the game.
- Obtain a Federal Tax ID number
- Form an LLC
- Open bank accounts
Obtain a Federal Tax ID Number
This is a 15 minute process. Go to irs.gov. Fill out an SS-4 (simple request form). IRS personnel will verify the information and issue your tax number.
Form and Name Your LLC
A Limited Liability Company is a legal structure for your business. You protect yourself from a number of legal actions and save money on taxes. You will need an LLC for each state where you are doing business.
The needs and rules for establishing an LLC are different in each state. For most states, you can fill out a quick LLC Articles of Organization form. Most states charge around $500 to establish an LLC, and you have to renew and pay a renewal fee (about half of the initial amount, typically) annually.
Establish A Bank Account
Finally, bring your tax ID number to open 2 business checking accounts at your bank. One will be for rehabbing and wholesaling and the other for buy and hold. Always keep the money separate and do not mingle your funds, or there will be terrible tax consequences.
If you are ready to move forward with your business and get a house under contract, call us for a private money loan. With a logic based lending model, we do not categorize you into limited tiers to determine whether we can help, or in determining your rate. We look at everything to see if it makes sense. Click here to pre-qualify.