Real-Estate Ownership Arrangement for You
In getting into real estate business, you will also have to decide whether you want to get sole ownership property, or you want to share it with a couple of other individuals. Of course, there are benefits and disadvantages whatever structure of ownership you are going to select. You can choose among sole proprietorship, joint ownership, partnership and corporation. Let me explain the mechanics of each before you pick out what’s best for you depending on your capital, amount of responsibility you can take, projected income and whether you want collaboration or not. You might want to work all by yourself, or you might want to work with a partner or a group. Either way, there are pros and cons. If you work solely, you will assume every revenue, as well as all the capital and responsibility, and expansion will be quite difficult. If you have a partner or a group to work with, the revenue might be divided, but you are capable of growing so big since you have bigger source capital and more people working towards a common goal. Regardless, the kind of ownership will be dependent on your decision.
Sole proprietorship means you will have a single structure with you controlling virtually everything going on with your properties. Your decisions will be the very factor that will matter the most, and no one has power over you or against you. You are on top of the pyramid. On the downside, doing everything all by yourself means limited capital, limited time, and limited possibilities to growing so big. On the other hand, joint ownership means having one partner to share the business with. As the saying goes, “Two heads are better than one.” It might not grow that big, but at least you have someone to celebrate the good times and bad time with, as well as share the financial and development roadmap with. That’s a lot better than doing everything all by yourself.
If you have a wide array of properties that are too much for you to handle, you might want to organize a partnership or corporation to cope up with the size. You can’t possibly assume all the responsibilities and tasks, as well as every financial matter considering that you’re only one person. With corporation, you have multiple brains looking over the future of the company, and flopping will be unlikely unless with severe instances and economic times. However, you have to accept that since you don’t solely own the property, you will have to consult your board and other investors prior to taking a step towards any plan. There’s a reason why you’re in a corporation. If you want to decide on your own, you might as well stick to sole proprietorship.
Regardless of what ownership structure you choose, you have to put the agreement in black and white, as well as the interest and responsibilities of partners and stakeholders. This is to prevent your business from getting divided, as well as to ensure you will not be violating anyone or anything. Also, be sure to avail the services of a lawyer or accountant. Your business needs them dearly. Every business does.