Before I dive into this week’s question, I wanted to take a moment to thank you all for submitting your questions in. There’s been so many of them in the last couple weeks… I wish I had more time to answer all of them.
Hopefully you find these blog posts to be beneficial. Also I hope that you can pick up on the passion that I have for helping people get into this business – it’s why I love answering your most pressing needs.
Let me know what you think of the content by posting your comments below.
With that being said, let’s look at this week’s question:
“What is the best way to set my business up that way I keep more of my of money?”
I think this question is fantastic because you are thinking in the right direction – not about keeping the most money per se, but about approaching your real estate investing as a business.
Most people think of it as an opportunity to make some quick money and those people will almost always fail. Those that approach it as a business will certainly have the best chance of success and of course, make the most money along the way!
What I want to give you today is a surefire real estate investing business plan that you can use to accomplish what you are looking to do.
The first thing that any successful business does is start with the end in mind. These are questions you need to answer:
1) What is the goal of my real estate business?
2) How do I know when I’ve achieved my goal?
3) What’s my exit strategy going to be?
You can’t build any business without knowing exactly what you want for your end result. Only when you have the end goal clearly defined can you understand what the steps are you need to take before that to get to your goal.
And a real estate investing business plan is all about laying out those steps that get you to your goal.
Assuming that you are at this point of clarity, you then begin deciding on how your business will be structured. I’d recommend that you talk to an attorney about this, but in the most basic form you will want to have some kind of corporation.
Usually with real estate, it’s an LLC. But again, depending on exactly what type of investing you are doing, what kind of corp you use will vary. That’s why you want to talk to a real estate attorney to discuss your specific situation.
This will allow you to keep more money by itself because in real estate, there are a LOT of opportunities to be sued. Protecting your personal assets is absolutely crucial.
The third piece to your real estate investing business plan is to determine how you are going to do business.
Are you going to do rehabs? Are you doing buy and hold?
These among other things are questions you need to answer. Your answers will guide you in what type of people you work with.
Having someone help you find the right properties with the most margin will help you pocket more money.
Having contractors that do good work at the most economical prices will help you keep more of the profits.
And lastly for your real estate business plan, you need to know your financials. Set a budget for everything and stick to it. Far too many people let the purse strings get loose and nickel & dime themselves to death.
Put accountability measures in place for every part of your business so that no one can rip you off either.
So to summarize, here’s how you can keep the most money:
1) Structure your business appropriately so that your assets are protected from lawsuits.
2) Build a team of people around you that know what they are doing. You will make more by buying good properties. You also save money by working with the right contractors.
3) Keep an eye on your bottom line. Set a budget and stick to it. Also put accountability measures in place for anyone who has access to the business checkbook. Have them for all of your contractors too – so that if they don’t get work done on time, they lose part of their payment.
I’ve actually put together a comprehensive resource that will help you in all of these areas, plus another that I didn’t mention… getting financing.
Having the right financing will go a long way toward your profit too. I have a video that explains our partnership program where we help you every step along the way and fund you fix and flip projects too: