OfflineI'm new to this as well but I'm ready to dive in to it. My wife asked a very good question though... aren't you acting as a realtor in one way when you ASSIGN a property to an investor? And if so, don't you need to be licensed? Are there ANY states that require you to have a license to assign a property?
Thank you!
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I've heard that being labeled a real estate investor can have serious tax effects on a person.
is this true?nd how do you get around this issue?
Thank you!
No. What you do is write up a contract on a property which gives you the RIGHT to purchase the property. All you are doing is selling that right.
I think what you mean is being labeled a dealer which would prevent you from taking capital gains when you sell a property. Here is an article on it:
http://findarticles.com/p/articles/mi_qa3681/is_199604/ai_n8741127
You will not be going in telling the owner that you are going to find someone to buy the property from them like a real estate agent is. What you are doing is making an offer on the home and have the right to assign the property to someone else if for any reason you do not want to purchase the property and you will make a fee from it. You will need to make sure that you have the assignment clause in the contract for you to be able to do it.
You are basically selling the contract in an assignment.
Or, if you do a double-closing, you're buying and re-selling the property.
So either way you are not acting like a realtor because you are not representing anyone but yourself; neither the buyer nor the seller.
Am I understanding this right, coach?
Thank you,
Rina
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yup, you gotter there Re, couldn't have said it better myself.
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Depending on the type of deals you're doing, running your investing biz through an LLC or S-corp (biz entity) gives you tax and liability protection that buying/selling as an individual won't.
An investor-friendly accountant or atty can tell you which structure works best for your situation. Might get referrals from your local REI club. You can usually get incorporation forms from your State's website. You can also get help from companies like LegalZoom.com.