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Small Business Resources
Hi Warren. I’d like to get your opinion on starting a real estate business. I have experience in purchasing properties, renovating them and then reselling them, but now I want to register the business and I’m not sure where I should start.
Hi Ron, thanks for writing. Real estate development and renovation work is pretty interesting, fun, risky and potentially lucrative. I wish you well. I don't know enough about your business to get very specific but there are clearly some considerations you will need to take into account: 1) Given that you are renovating homes for people to live in, you will probably want to incorporate to protect yourself from liability issues. However, there are greater costs of set up associated with incorporation and doing annual tax filings. Some accountants encourage people to hold off incorporation until revenues grow to a certain stage and others suggest incorporating right away. So, you should speak to an accountant about the balance of cost, tax implications and liability risk management. 2) If starting this as a business, are you providing a service to others who want to buy and sell by providing renovation assistance, or are you just selling the end product once you are finished renovating. If the former, you will need a marketing plan for your business. If the latter, you will likely benefit from a strategic relationship with a professional real estate agent or two who can accelerate the sale of your property. 3) There is a difference in tax treatment between a home you have lived in and a home that you have not lived in and are selling just as a business. If you have been doing one off reno-sell projects, make sure you are aware of the different costs of doing this as a business. You don't want surprises that negatively affect your profitability. 4) Depending on your level of experience and knowledge, make sure you are educated in the property game. There are tons of programs out their like REIN (real estate investment network), PRIG (Professional Real Estate Investment Group) and more you find online. There are also tons of books. Check out Brad Sugars' The Real Estate Coach as an example. Good luck and have fun! Warren
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