Whloesaling, LLC, And Being A RE Agent??
I am very interested in wholesaling homes in my area. I just recieved my realtors license and have heard that it's much harder to flip homes while being a licensed agent. I was wondering if my wife could set up an LLC and we could buy and sell homes through the company. I would have her sign all the contracts and I would just find the properties and help her negotiate with the sellers and buyers. Would I still have to disclose that I'm a RE agent if everything is in the LLC's name which would be run by her?? I don't know if this has to be disclosed if I have anything at all to do with the deal (such as helping inspect property and negotiating price) or just if my name is involved with the LLC. I would like to know if there's anyway to do this legally while still keeping my license??
I am a Robyn Thompson "Queen of Rehab" student and she encourages her students to obtain their brokers license. She is a broker and does not hesitate to disclose this fact. She has a great reputation amongst other agents because they know that she understands the transaction.
If you have not heard any of her material, I encourage you to either attend one of her seminars (boot camp) or if she is appearing at someone else's event, go and listen to her or either buy one of her tape programs. She goes thru everything rather extensivley.
One of the disclosures she will make when she is transacting business is on the contract she indicates that "one of the principles is a real estate broker". Thats it. Or she may indicate that she is a broker acting as a principal. The fact that you intend to use your LLC has nothing to do with the disclosure.
Something else she does is if she is getting a good deal, she tells the other agent/broker that she does not want her portion of the commission and that she will complete all of the paperwork. Other agents love this because they are off the hook in terms of completing all of the paperwork.
So you see, your wife does not have to cover for you. You can do business in your own name as long as you are up front about it. By the way, don't you think that other agents/brokers are buying property? Why wouldn't they - you all have first hand info via the MLS or anything that comes into the office that is a great deal.
Don't be afraid - take the plunge. It might also be helpful if you affiliate with a local real estate investors group. They are usually a great support group and they might be some of your best customers. I am sure that some of them have their license - if for no other reason than the access to MLS.
Good luck.
My intentions are to do quick flip transactions to other investors. I have read that prospective buyers are hesitant to deal with RE agents when it comes to selling their distressed properties. This is why I thought I could use my wife as the owner of an LLC that strickly deals with my wholesaling business. This way my potential sellers and buyers wouldn't get nervous knowing that I'm a licensed agent. I basically want to sell RE as an agent which gives me access to the MLS and the inside on pocket listings. At the same time I will be working my area for wholesale deals which would be done through the LLC. Does this sound possible or am going about this in the wrong way?? :-?
The founder of our local REI group has been in the business for 20+ years. He highly recommends getting your liscence. He has never found it to be a deterrent. My feeling is that if a homeowner is in distress they are motivated to sell...it doesn't matter who they sell it to as long as it relieves their problem.
I am looking into getting my liscence. It will really help me understand all the legal aspects related to REI including forms, filing procedure, code issues pertinent to my state as well as unlimited access to the mls.
Curious though for any agents out there...if I have access to the mls expired listings is there anything that prohibits me as an agent from approaching the owner to purchase directly after the listing has expired?
Well I'm no expert on Kansas law but. . . . putting together a shell LLC owned by your wife and then not disclosing that relationship is likely to end youp in more trouble than if you just did the deals in your own name.
It smacks of deception and is likely to be interpreted as such if somebody objects.
A real estate license is a two edged sword, i.e. it cuts both ways. I used to carry one, now I don't. i was never into the brokerage business per se and at some point it became more trouble than it was worth.
Should I still set up a LLC for the homes I wholesale in order to protect myself and for the tax benefits. I was also wondering what types of things are tax deductible in the wholesaling business?
richyrich,
there is no question that you need an LLC to start your purchases but, based on a lot of reading and items of note that I heard at a few seminars, do not rely on one LLC to provide the level of protection you need if you intend to buy multiple purchases. You may need more than one to ensure that no one can pierce your protection and take all your goodies.
I am not a tax advisor so I can not advise you about all of the tax advantages available to you. I can tell you that I own a set of tapes by a tax attorney by the name of Yeiter - I believe that his name is George. YOU NEED TO LISTEN TO WHAT HE HAS TO SAY and then have your accountant listen to what he has to say. Another expert that comes to mind is Lee Phillips. Both of these gentleman provide guidance that is so worth it - that you need to buy one or both of their programs.
Here is one example - depending on your activities, did you know that the IRS can deem you a RE Dealer even though you claim that you are an Investor? I did not know that until I heard the program. Tax treatment and write offs are way different for a Dealer vs an Investor.
Richyrich - it seems to me that you and your wife need to get a better handle on your investment strategy. Write it down, take a closer look at it. Seek the assistance of a good attorney and accountant. Make sure they understand RE. Do not - I repeat - Do not go to your friends brother-in-law and get some poor advice. You may even need to spend a little time doing some fundamental studying and fact finding on your own. I sense that you are anxious to do this business and you are getting ready to step in some crap because you are rushing.
Be careful and get focused. Take a minute to get it together. There are deals everyday all day. Plan your work and work your plan. Do business the right way. Good luck