Depending on the type of real estate investing, prospective owners have a few options to consider. Many decide on rentals, buy “fixer-uppers” to flip, or prefer wholesale.

The first step is becoming familiar with starting a real estate investing company. You can learn more about the process by following these tips and steps below.

How Should You Structure Your Real Estate Investment Business

In today’s investing landscape, more people choose real estate as their preferred asset. The goal for most is to build wealth to then be able to leave the grind of a typical day job. You can make the income passive or choose to be a working landlord and establish a viable business.

Several options are available to a prospective business owner, whether you decide to go into the rental aspect, buy run-down properties to fix up and sell or choose wholesale.

In any of these scenarios, the priority is learning the steps to turn an idea into a reality. Learn the benefits of a real estate business at and then follow here for the different types of properties and what they involve.


With wholesale you can avoid the purchase and still make a profit. The property will be bought and sold rapidly after finding a buyer without needing to make improvements/repairs and only needing to put up minimal funds.

Acting in the wholesale position, you will contract with a seller to purchase a “distressed” structure, for which you will then search for a buyer. The prospective owner will be assigned the contract with you putting up minimal funds.

The investment can be minimal since the wholesaler’s objective is to find a buyer and assign the contract before the property is due to be settled. You will get a return for your efforts if the buyer agrees to a higher price point than the offer initially made to the seller.

The money out of pocket will go towards taxes, including those of a self-employed businessperson, and for the earned income.


House flipping involves buying a “fixer-upper” to then renovate and sell for a higher price than you paid. Often, these properties need a lot of work to raise their value, making the prospect a risky undertaking.

The possibility of losing money if the house doesn’t sell is very real as is the potential for it needing much more work than you can recover. Also, unless you’re versed in the varied remodeling tasks, third-party contractors must be involved to handle the renovation projects.

With this business, you’ll have self-employment taxes, an added expense when wholesaling or flipping properties. For properties that are held for more than a year, capital gains tax will be due when selling the investment instead of paying income taxes.


With a rental property, you will hold onto real estate investments for an extended time. The objective is to collect rent to pay the mortgage balance down, after which the building or house will be sold to earn a profit. These are considered “capital asset properties,” since they’re seen as “buy-and-hold” assets by the IRS.

Tax incentives come with this opportunity including deductions for depreciation and improvement/repairs. In order to protect your wealth, you must invest in landlord insurance or select an adequate business structure.

You can choose sole proprietorship or take a partner, but many investors decide on an LLC- limited liability company. As a businessperson, an LLC protects you from debt liability, and no one can bring a lawsuit against you for anything business-related.

Personal assets are protected by the LLC, plus any profits flow through private tax returns, allowing for the personal tax rate.

As the owner, you’ll enjoy greater flexibility not only with profit distribution but also with management responsibilities. With an LLC it’s challenging to add more than the sole proprietor to the business.


It’s also possible as an investor to establish a corporation running as an “S-corp or C-corp.” This option reduces risk and protects private assets. This option allows other capital contributions from other investors plus you can sell corporate shares.

The downside is having double taxation and being responsible for personal income taxes on the funds paid by the corporation.

It’s recommended to consult with a real estate lawyer or an accountant specializing in corporate finances to gain insight into which of these makes the most sense for your specific investment needs. Go here to gain insight on getting started in commercial real estate investing.

What Are the Steps to Starting a Real Estate Investment Company

While it seems like a challenging undertaking, starting an investment business doesn’t have to become overwhelming. Here are steps to follow to begin the process.

The research

When considering the option of a real estate investment business, performing due diligence in research is critical.

The priorities are learning who the competitors are in the market and where the opportunities lie factoring in the inventory surrounding your location and which type of business structure works best for your situation.

You must also become familiar with the communities in the areas where you want to concentrate your efforts to learn property values and which location offers attractive amenities.

The goals

As a business owner, establishing a plan with specific objectives can guide you toward your desired success. Primarily, the focus should be on how you want your career and financial standing to progress. You can then develop a strategy to meet these goals.

The education

When going into the real estate investing business, becoming familiar with real estate and the market, the way it works, should be prioritized.

It’s unnecessary to become a licensed agent or obtain a degree as an investor. Learning the mechanics will help you gain insight into the buying process, help develop a business strategy, and allow you to realize the tax implications, regulations, and potential risks.

In trying to become familiar with the industry, you can get much information from webinars, podcasts, workshops, and books.

The financing


Financing can be among the biggest hurdles when establishing a real estate investment business. Initially, there’s considerable capital to acquire but it’s possible to finance without funds upfront. It would help if you displayed creditworthiness, sound financial standing, and minimal debt.

Based on your financial status, many options are available to collect the capital including the following:

  1. Owner financing
  2. A government loan or mortgage
  3. Partnerships
  4. Private lender funding
  5. Crowdfunding

Final Thought

This is not an exhaustive list of the steps to follow. It’s wise to reach out to a real estate attorney or a financial counselor, perhaps a corporate accountant, to guide the initial steps and lead you through your strategy.

The prospect can seem intimidating at the start but with adequate professional guidance and becoming educated in the mechanics, the process doesn’t have to be overwhelming.