Are you wanting to start your own real estate company but do not have a broker’s license? The answer is setting up a business entity LLC brokerage. This article is going to talk about what it takes to set up a business entity brokerage and the costs associated with it, along with options to consider.
First I want to say that there is a decent amount of work and time that it is going to take to set up an LLC and then get a broker’s license for it. It is not an overnight process, and that is mainly because you are having to wait on the Secretary of State for your LLC formation, IRS for your EIN, and Texas Real Estate Commission (in Texas) for your broker license. However, if you are diligent and do not waste time
on your tasks, then you can have your company up and running in a few weeks.
What Do I Need?
What do you have to secure to set up an LLC brokerage?
- LLC Certificate of Formation
- Operating Agreement with a licensed broker listed as a manager
- Errors and Omission Insurance with a minimum $1 million of coverage
- No delinquent taxes owed for the company
What Does It Cost?
Now that you know that this is not a fast process, you may be wondering what the cost of starting an LLC brokerage include.
Before getting into that I would highly recommend you have about six months of earnings saved to cover the expenses that you are going to incur starting a new company from scratch.
Here are some of the costs you are looking at to get started:
- $250-$400 to set up an LLC
- $50-$100 to set up a bank account for the LLC
- $305 to apply for the license with TREC
- Are you going to be a Realtor Brokerage? If so, then you will have to pay for membership and MLS access with the local board for the LLC Broker License, about $500 on average to start. Don’t ask me why. It is a ridiculous rule if you ask me, but that is a question for TAR.
- $20-40 transferring your license to the LLC brokerage
- $50/mo. or about $600 for the first year of Errors and Omissions Insurance
Additional costs that you need to consider are advertising and promotion of your company in order to acquire leads. Then there is your office supplies and utility costs. If you already work from home then you should be pretty familiar with these costs. Also, there are the licensing and profession fees that are required in order to operate.
Finding A Sponsorship Agency
You may still be thinking, but where do I find a designated broker? Sponsorship with Spirit Real Estate will allow you to have a designated broker for your LLC. The cost for sponsorship is $299 to start and $149 per month.
Sponsorship includes the application costs and the recurring costs to maintain the license with TREC. You are operating as an independent business, but we are always here to mentor and help you along the way to make sure you are succeeding.
For an additional $50 per month, you can have your own license with no restrictions on user accounts of our proprietary CRM. This will streamline your invoicing and make managing your agents and clients much easier than with most of the expensive CRMs that are available.
You should know that, as an LLC, you are operating as a completely separate company. You will be in control of and responsible for your own bookkeeping, accounts payable, accounts receivable, and all of the operations that are required to run the company.
The designated broker’s responsibilities only extend to the broker-related duties.
So, that is enough of the info dump. You should keep in mind that this will be your own company. All of the proceeds from your work will be yours. The income potential is only limited by your imagination, and of course how much you are wanting to put into it.
“You will get out of it exactly what you put into it.”
Make It Even Easier On Yourself
I mentioned earlier you would have another option. So what if I could tell you that all of the administrative duties and costs would be taken care of so you could focus on building your team and closing transactions? You would also have more brand recognition than a startup and you would still have the income potential of a broker?
Would that be something that interests you?
Check out our two franchise options for broker sponsorship or discover the easiest way to become an apartment locator: