Topic: Business Start Up Advice
Here are some key points to consider:
- Pick a name. And while that seems like an easy thing to do a lot of people blow it by not using a name that represents what the business is about. For example they go with something like, "Domonikki's Investing". The problem with that is someone is likely to think that you're involved in stocks and bonds rather than real estate. Sometimes someone tries to get too cute in choosing a name and comes up with "Shedrickxz Young and Associates". The problem with this name is that it doesn't mention real estate investing at all and number two it may be a bit too intimidating for sellers when you hand them your business card. Your business name needs to tell the person hearing (or seeing your name on your business card) what your business is all about without them having to guess or being put on the defensive.
- How to organize it legally. While most people will start their business as a sole proprietor it's best to convert it to a LLC (Limited Liability Corp) or a "C" type corporation when the profits start rolling in and you can afford to organize the business so it provides you with as much legal protection as you can get. Hey, we both know this is a nation of "litigation crazy" individuals that will take someone to court over the least little thing... so protect yourself as much as you can with the proper business organization.
- Insurance. Thankfully real estate investing is a simple business to start and doesn't require a lot of insurances being in place but one very useful type of insurance that can help protect you in case of a lawsuit is an "Umbrella Policy". Most umbrella policies cover you for "x" millions of dollars and go up and beyond other types of insurances to help cover you in case you do get taken to court and end up losing. The great thing about umbrella policies is that they aren't nearly as pricey as you think they are. A policy cover you for a $1,000,000 can be purchased for a few hundred dollars per year. This can be very inexpensive insurance.
- Money. Yeah, many of the principals I talk about in the books, programs and seminars I'm part of deal with strategies and techniques anyone can use to invest in real estate without using their own cash or credit... and those are very real methods of getting rich in this business that thousands have used in this country to make money in real estate.
BUT if you somehow have the ability to find or create or have quick access to a small "nest of money" let me tell you that success in this business can be made so much easier! Here are just two ways that you can start to build your little "nest of money". Way #1, Go to your local bank, introduce yourself and take out a very small loan. If your credit is spotty you may be forced to pay a very high interest rate or you may be forced to open a separate savings account with the bank that you'll have to put money in to help "secure" the note.
And yes I know it sounds kind of dumb for a bank to require you to have money in order to take out a loan but that's the way the game is played especially if your credit history isn't perfect. But what I want you to do is to take out a small loan and then... are you ready for this? Pay it back. Make a few regularly scheduled payments and then pay the thing off entirely. And then take out another loan... a bigger loan and do the same thing all over again.
Not only will this boost your credit score but you'll have that bank as an ally so when you come across a sweet deal that requires some of your own money down you'll be able to go through the front doors of your bank, sit down with a loan manager and in a short period of time walk out with check for the exact amount of money you need. This can make your investing life so much easier.
Here is way #2. Do the same thing with credit cards. Get a couple of spare ones that allow you to take out cash at very reasonable terms. And like the bank loan, use these cards and pay them off-quickly! The interest rates on many credit cards is astronomical so you don't want to be carrying balances for too long BUT the fact remains that most startup businesses in this country were started with credit card financing and if you can manage them properly and not consider them "free money" they can be very useful tools for your investing business.
And what if you don't have good enough credit to get a regular credit card? There are several credit card companies out there that provide credit cards to people that have damaged credit. What you would need to do is supply some sort of financial security in the way of a money deposit that the credit card company can access if you do not pay. These types of credit cards usually have a pretty low limit but if you make your payments on time it won't be long before you will start being approved by more standard credit card companies that don't require a security deposit.
