If I want to own a business that flippies property what steps need to be taken?

Asked over 3 years ago - Gibsonia, PA

Got the idea from watching Armando Montelongo who does renovations of a single units and sells them for profit.

What business license would be needed to further this venture and run in a small office?

Do you need to be a real estate agent or hold any specific credentials to run this company? If you sell the house yourself is that legal or would you need a real estate agent? If you open a business office say just for anything and your not selling anything out of it do you need some sort of license, its used for conferences and client contacts.

Attorney answers (3)

  1. James S. Tupitza

    Contributor Level 18

    1

    Lawyer agrees

    Answered . Lets start with PA law on this. Under the Licensing and Registration Law you do not need to be licensed to deal in your own property. I assume you are the same person who posted the other question on rent to own and sheriffs sales. I didn't fully answer your last question, but I see it bleeding into this one.

    Let me tell you about a case I handled this past week, which was like one handled the week before. My clients, who are among the most sophisticated sheriff's sale buyer in the area, bought a home at a mortgage foreclosure sale on a first mortgage. They then got a mortgage (with title insurance) and spent a lot of money taking the house from a pile of manure into something quite nice. They got it under agreement and were ready to count their profits. The new buyer got a title search and discovered that some of the junior lien holders, including the equity lender and several credit card judgment holders never got notice of the sheriff's sale and they in fact were not divested (they still had their liens). I got hired by the title company to clean it up. Because I could still foreclose on the second lien, which had been purchased by the title company, I was able to make the others go away for a small payment. If there had been no title insurance (the normal situation) the owners would have suffered a complete loss of their money.

    The week before, my clients, also extremely sophisticated sheriff's sale buyer with more than 20 years experience, bought a home at first mortgage foreclosure sale, and then fixed it up for sale. When the new buyer got a title report, one old judgement showed up and it was not listed on the affidavit of notice for the sheriff's sale. That meant the judgment was not divested. I was able to negotiate it down a little but my clients not only lost their profit, they also lost their investment and some of their "angel's" coney. They had to come to closing with a check.

    If you look at the guys who are on tv or write books about making money in real estate, you will find they all have one thing in common......they all end up in bankruptcy.

    There is no fast money, the are no corners that can be cut, and there is no easy way to eliminate the risk. People that make money in this business either take significant risk because they can afford to lose the money, or they make less money, but spend a lot on lawyers and searchers. If you want to do this, get a real lawyer. I'd go in to Pittsburgh and see either Ken Yarsky or Andrea Geraghty. They are both excellent lawyers.

    DISCLAIMER The response given is not intended to create, nor does it create an ongoing duty to respond to... more
  2. Pamela Koslyn

    Contributor Level 20

    1

    Best Answer
    chosen by asker

    Answered . You will need a business license from your city, and maybe a corporation to LLC to operate this business, but not a real estate agency license, although you'll save a lot of RE commissions if you do get your own license, as well as have the background knowledge of how RE transactions work and what forms are needed.

    A contractor's license wouldn't hurt either, so you can do your own remodeling and not have to pay retail for those services.

    In an up RE market, the escalating prices can make even these many expenses a good investment. But in today's shaky market, these expenses will be tough to bear, even if you can find rock bottom prices on RE to buy.

    Some basic flipping information is linked below.

    I'm only licensed in CA. Please note that this answer does not constitute legal advice, and should not be relied... more
  3. Clifford L. Tuttle Jr.

    Pro

    Contributor Level 15

    Answered . The answer given above is an excellent one, but it only scratches the surface of risks. Nevertheless, money can be made in buying foreclosure houses and I have clients who are doing it. Most rent the houses rather than flipping them, at least during the last 5 or so years. The market is not good enough to resell a sheriff sale house unless it has an excellent location.

    Clifford L Tuttle, Jr
    Attorney at Law
    Pittsburgh, PA

    The foregoing answer does not constitute legal advice and does not create a lawyer-client relationship. Answers... more

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