Posted by B.L.Renfrow on June 08, 1999 at 09:07:03:
Paulette,
No, you don’t need to be a broker to do the deals discussed here - as long as you’re not acting as one. Regarding your conversation with the state employee - remember, you’re dealing with some low-paid bureaucrat who has no more idea what CRE investing is than the man in the moon; this IS New York, after all! Incorporation is an entirely separate issue. The application forms do, I believe, require that you state the “type of business the corp. will be conducting,” or something to that effect, to which you reply, “Any lawful business permitted…”
I’ve just sent in my forms to become incorporated. I called the state office (I live in NY) because I read that some states require that you have a permit or license in order to operate your business. When I inquired about this, they asked me what kind of business I would be operating. When I told them real estate, they said that I would need a license to become a broker. This makes no sense. I’ve heard LeGrand and others say that for what we’re doing, we don’t have to be licensed brokers. Has anyone else run into this problem? Do I actually have to delay starting my business while I go to obtain a license? I’m really getting frustrated.
Re: License to operate R.E. business??? - Posted by Matthew Chan
Posted by Matthew Chan on June 08, 1999 at 17:24:49:
You need to clarify that you are only do real estate activities for yourself. My corporate business license is under Real Estate Investments. There were no hassles once you make it understood.
Posted by Bill K. (AZ) on June 08, 1999 at 12:32:13:
Paulette,
After I set up my limited liability company, I went to my city hall in order to apply for a business license. This may be the permit/license that your state office was referring to. When you told “them” that you will be involved in “real estate”, they assumed that you will be buying and selling for others. Very few people understand investing in real estate for yourself.
“When I inquired about this, they asked me what kind of business I would be operating. When I told them real estate,…”
My guess is that when you mention the above, the person you spoke to assumed that you are planning a brokerage business. I suggest you specifically state that you are an investor acting as a principal in your own interest.
To my knowledge, nowhere in the US does someone need a licence to invest (as principals) in real estate.
As far as I know, the only time you would need a real estate license (be it broker or salesperson) would be if you were working for someone else (for compensation) in helping third parties buy and sell houses. As long as you don’t try to act like a realtor or broker (listing homes, getting paid to find a buyer), then you should not need a real estate license.
Most people have no idea what Real Estate Investing involves, so when they hear the word “real estate” they immediately assume you will be trying to sell homes to people for commission or list homes for people (basically, being a real estate agent or broker).
Don’t get frustrated so early in the game. This is only the first time you will hear people tell you that “you can’t do that” or “it’s illegal”. Just make sure you check out the information first, but don’t get discouraged or believe everything you hear.