Your Business Setup Checklist (Read This Entire Document BEFORE You Get Started)
Creating A Business — You are opening a business. This is not a hobby. Businesses have start up costs and they also require ongoing costs. Before you start creating logos, buying domain names, and creating business cards give some serious thought into this step. Consider your brand identity. Keep it short and simple. Focus on relevance.
Choose Your Business Name —Decide on a business name and target market for your business. This is a decision that should not be done hastily and you should put some thought into your business name, your goals and your vision. Your business name should be related to your target market, your vison and your goals.
Your Brand Identity —Focus on words like “house buyers” or “home buyers” for your motivated seller site and your business name. Combine those with your target market City, County or State. For example, if your target market is the city of Pompano Beach, then “Pompano Beach Home Buyers” or “Pompano Beach House Buyers” would be good for brand identify since it explains clearly what you do (you buy houses in Pompano Beach). Decide on your target market and keywords. Pick 3 to 5 target keywords for SEO. Get an SEO Friendly Domain Name
Establish Your Business Entity — Most CPA’s recommend an LLC for a real estate business that is buying rentals or wholesaling and flipping properties. Your next step is to open your LLC. Your LLC name must be distinguishable from all other business entities registered in your State and must include the words “Limited Liability Company,” or “LLC,”. If you are opening a business in Florida, you can check the availability of your business name on the Florida Division of Corporations website by clicking here.
File Articles of Organization —You will have to provide key details regarding your LLC. These include LLC name, principal place of business, your mailing address, the registered agent’s name and address (this can be you), and also the names and addresses of the LLC’s managers or members (if any). You will also need to pay a filing fee which is currently $125. If your business is located in Florida, you can file your Articles of Organization to establish your LLC on the Department of State Divisions of Corporations web site which you can find by clicking here. Every year you will be required to file an Annual Report which costs around $138 as of this writing.
Create an Operating Agreement — Consider hiring an attorney to establish your LLC and to File your Articles of Organization and to create your Operating Agreement. It is a good idea to have a business or corporate attorney and this is a great way to start a relationship with one.
Choose a Registered Agent— Your attorney can also be the registered agent for your LLC. If you do this, your attorney’s name will be public and visible, but your name as the owner will not be on the initial Florida formation documents unless you choose to list it. This can help with privacy since your Operating Agreement is not a public document and that is the document which details ownership and membership interests in your LLC.
Get A Tax ID Number (EIN)— You will need a Tax ID Number (EIN), to open a bank account and to pay taxes. You can get a tax ID Number online directly on the IRS website which is located here.
Open a Bank Account — Consider using a local bank to get more personalized service, to establish lines of credit in the future and for loans for refinancing your rentals in the future. The bank is going to ask for a copy of the Operating Agreement, the Articles of Organization, and your Employer Identification Number (EIN). They will also want a government-issued photo ID for each authorized signer of the LLC. Some banks may also require a a document that formally designates who has the authority to open the bank account on behalf of the LLC (Business Resolution) and will require a beneficial owner certification form for anyone who owns more than 25% of the LLC.
Create A Logo — Find a freelancer on Upwork to create your business logo. Make sure your business name and your logo aligns with your vision and your goals and your target market and domain name (for your motivated seller site and for your business name in the steps above).
Domain Name — Make sure the domain name is available on Go Daddybefore you setup your business name and LLC in the steps above. Your domain should be a .com domain name (not .net or anything else). Do not use numbers (cash4yourhouse) or dashes (we-buy-houses) in your domain name
Domain Name Length should be no more than 15 characters (ideal is 6 to 15 letters with a .com at the end).
Learn Your Target Market— Identify your target market and make sure it aligns with your vision and your goals. Are you looking to Wholesale and Flip Houses or are you looking for Section 8 Rentals, Airbnb’s, or houses to fix and flip? Learn your target market well and understand the zip codes and subdivisions. Learn zip code boundaries and where one zip code turns into another and where the dividing boundary is with this tool.
Map Of Your Target Market — Use Dolph Map if you are in Florida to learn sub divisions and Zip Codes and to drive your target market. Using a GPS is fine in order to guide you to your destination, but it will not teach you anything about your target market. Knowing where one neighborhood changes into another is very important.
Phone Numbers — Set up your CallRail account and get a total of 10 numbers for call tracking. You will need a unique number for your business card, your seller website, your Facebook Business Page, your Google Business Profile, your YouTube site and Your Instagram Page. You will also need 5 different phone numbers for postcards.
Business Phone — Use a VOIP provider like RingCentral, or Nextiva, or Vonage. Do not use your personal cell phone for your business. Make sure you have a professional sounding voice mail. If you have a job and are not able to answer your calls live during the day, then consider adding a Live Calling Answering Service. A call answering service has the added benefit of being able to answer your phone all the time and for you to be immediately notified.
Internet Security — If you travel or work remotely out of your home, do not login to open network WIFI’s at hotels, airports, Starbucks etc. without first connecting to a VPN. Make sure your internet connection is secure by always using a VPN when you are outside of your home so that your browsing is not intercepted on an open WIFI. Also make sure you have a good antivirus software like Norton and also anti spyware installed on your computer
Mailing Address — Get a business mailing address for your website, business card, and postcard return mail. See the Google Business Profile information below with regards to your mailing address being used on your Google Business Profile. If you work from home you can use your home address but I highly recommend you not to do this.
Google Business Profile — Create a Service-Area Business on Google (if you work from home) or rent a coworking/virtual office that meets Google’s rules. Do NOT use a UPS store or P.O Box – Google does not allow this.
Get Reviews For Your Business — Have friends, family, and other students at our real estate events and boot camps leave 5-star reviews for you on your business profile. Network at our events with other students.
Business Card — Hire a freelancer on Upwork to design your business card using your new phone number, your new email address, your logo, and your domain name. You must look like a professional house buying company.
Polo Shirts — Order branded polo shirts with your logo (we use Merchology for merchandise).
Photos — Take photos in front of houses wearing your logo shirt for use on your website pictures. Also get some professional headshots done to use on your website and business card and social media.
Videos — Record videos in front of houses wearing your logo shirt. Create different versions of the same video for Facebook, YouTube, and your website. Make sure you use your different call rail numbers in the videos (example use your call Rail number for YouTube for your YouTube video).
Social Media — Establish your business presence on social media. Set up a Facebook Business Page, an Instagram Account, Twitter Account, Linked In Account, and You Tube Account, Hire someone on Fiverr to create your profile cover page pictures and banners. Remember your goal is to look like a professional house buying company.
Seller Lists — Create a free trial account at lexlevinrad.com/propstream and pull your first list for “Tax Delinquent,” “Pre-Foreclosure,” “Pre-Probate,” “Vacant,” and “Zombie Properties.” You will be marketing to them.
Postcard Campaign — Upload your seller list CSV file to Lex Direct Mail and start a direct mail campaign to motivated sellers. Start off with Pre-Foreclosure and Pre-Probate. Mail postcards using the correct Call Rail numbers. Do not market to anyone until you have all the steps above completed. You need to look professional.
Market to Motivated Sellers — Mail postcards or yellow letters, skip trace lists to get their cell phone numbers, call sellers, send texts, or send emails. Start driving for dollars in your target market and learning it well.
Paid Ads — Learn how to create Facebook Ads, YouTube Ads, and Google Ads for marketing to motivated sellers. Learn how to build and use custom audiences. We teach this to our coaching students at our Inner Circles.
Create Your CRM — Use Carrot CRM to track leads, calls, emails, and texts.
Set Up Smartphone — Create a smrtphone account for use with Carrot CRM to record and manage calls.
Talk To Sellers — Practice using your scripts. Understand the 4 Pillars, Pain Points, and “Going for the No.”
Managing Leads — Respond quickly to all inbound leads. Qualify leads based on price, motivation, condition, and timeline. Learn how to screen for motivated sellers. Any lead with a pain point is an immediate appointment.
Appointments — Go on appointments with motivated sellers that meet your hot-lead criteria.
After Repair Value (ARV) — Calculate ARV using sold comps from the Title Pro Report and review MLS data. Watch the “ARV Training” on the Training Site which has 8 videos to walk you through understanding ARV. Also watch the “Title Pro” Training videos on the training site (www.lexrealestatetraining.com)
Repair Estimates — Learn how to estimate material and labor costs accurately. We teach this at the Fixing and Flipping Houses Boot Camp where we cover ARV, Repair Estimates, Labor and Material Costs and establishing your Maximum Offer Price (MOP). On the second day of the Fixing and Flipping Houses Boot Camp we have a Home Depot Bus Trip. Make sure you do not miss this in order to learn about materials that we use on properties that we buy and rent and fix and flip. You must know how to create a repair estimate to bid on properties and make offers.
Maximum Offer Price — Use the Rehab Property Calculator to determine your maximum offer price (MOP). You will need to know how to plug in the variables like the repair estimate and the After Repair Value (ARV) in order to use this Rehab Property Calculator.
Make an Offer — Present your offer to the seller contingent on at least a 10-day inspection period. The longer your inspection period is, the better it is for you since it gives you more time to evaluate the property. Make your closing date extended too. An ideal scenario would be a 30 day inspection period with a 60 day closing.
Inspect the Property — Pay for a professional property inspection. If you are going to keep the property then this is a very worthwhile investment. If you are going to wholesale or flip the property then the inspection report will help you get a price reduction if there are any issues with the house. An inspection report is also useful for sharing with potential buyers. Order a General Inspection, 4-Point, Wind Mitigation, Termite, and Sewer Scope Inspection.
Your Exit Strategy — Decide if you will wholesale, fix-and-flip, or hold the property as a rental before signing. The biggest mistake that beginners make is signing a contract and then trying to figure out their exit strategy. This wastes valuable time which is critical when you have an inspection period.
Title Company — Deposit escrow, track inspection periods, review lien searches and get extensions if you are close to your closing date and the title company needs more time. Use addendums to change the purchase price or to extend the closing date and have these addendums signed well before the closing date
Your Lender — Confirm your private lender will fund your purchase before the inspection deadline. Communicate with their attorney and understand that they need a few weeks to prepare mortgage and loan documents. Do not put up an escrow deposit if you are not sure that you can get funding.
Escrow Deposits— The lower your escrow deposit is the better. If your deposit is only $100 then this is the maximum amount that you could lose if your buyer made a claim on your escrow deposit. Remember that for a contract to be valid there needs to be consideration (an escrow deposit). Without an escrow deposit, an attorney could argue that your contract is not enforceable. So you must place a deposit in escrow with the title company if you want your contract to be valid and enforceable.
Memorandum Of Contract — It’s a good idea to record a memorandum of contract with the County Clerk. This Notice of Interest is recorded in the county records to put the world on notice that you have a contractual interest in the property (your purchase contract). Once recorded, it clouds the title and prevents the seller from selling the property to someone else. Since you are “clouding title” by recording a memorandum of contract you will need to be able to show a clear intent to close – meaning you have the funds available, you have a private lender and you are willing and able to close on and purchase this property. Remember that to make your contract enforceable, you must have the escrow deposit at the title company. Do not record a memorandum of contract without an escrow.
Closing — Schedule your closing, verify the wire instructions with a representative of the title company by phone to avoid wire fraud. Make sure you have good internet security, anti virus software, and anti spyware. Never ever send a wire from an Open WIFI. When in doubt go to your bank to do the wire transfer and verify the routing number and account number with a representative of the title company over the phone. Emails can be intercepted and wire instructions can be changed so be very careful with your internet security.
After Closing — Get a video testimonial from the seller and a 5-star Google review to use on your website and your Google Business Profile. Put the video testimonial on all of your Social Media and also on your Google Business Profile and on your website.
Learn How To Track Your KPI’s — Monitor your cost per lead, cost per appointment, cost per contract, and your return on investment (ROI). How did you get the lead? How much did it cost you? How much money did you make? Can you replicate this and do it again and again and again? Can this be systematized?
Scale Your Business — When your ROI is consistently 300–500%, you are ready to start thinking about scaling your business. Do not be in a rush to scale. Scaling too fast is a mistake. Gradually increase your marketing and ad spend without overwhelming your lead intake and acquisitions department. At this point you should consider hiring someone to help you grow and manager your business.
Hire a Lead Manager — Your first hire should handle inbound leads and list management (consider starting with a VA if you do not have much revenue). If you are consistently doing multiple deals a month and making more than $15,000 a month consider hiring a local person to be your administrative assistant and lead manager.
Hire an Acquisitions Manager — Hire only once you are profitable and you are getting too busy to manage your seller appointments. You may also get to the point where you are tired of going on seller appointments and would rather outsource this to an Acquisitions Manager.
Scale and Grow By Hiring the Right People — Build systems and software and establish your Standard Operating Procedures for your business. Create training videos and then start hiring the right people to grow and scale your real estate business profitably. The most important decision that you will ever make in running your business is hiring the right people. You need to hire only A- players who make up a small part of the work force. According to research from Brad Smart (author of Top Grading) only about 10% of employees in a typical company are true A-players. 60%–70% of employees are B-players who perform adequately but don’t dramatically move the needle in your organization. 10%–20% of employees are C-players, who may underperform or be a bad fit for the role. Hiring C Players will destroy your business. Unfortunately 90% of the workforce are either B or C Players. You cannot afford to hire B or C Players if you are a small business owner. Hire the best people and pay them well. In High-Performance Cultures (at elite firms like Google, Apple, etc.), A-players can represent 25–40% of the team, because hiring standards and retention programs filter out mediocrity over time. In startups or growth companies with rigorous recruiting and accountability systems, this ratio can climb toward 50%. If you want your company to be an A-Player, then only hire A-Players.
